Abstract: Since corporate governance theory has gradually evolved from shareholder governance to stakeholder governance, it has been a question of concern whether stakeholders can effectively play the role of governance. From the point of view of earnings management, this paper explores the external governance role of stakeholders through the analysis of whether stakeholders can mitigate the earnings management behavior of executives with literature research method. Through studying relevant literature, the paper finds that analysts, institutional investors, media, auditors, and suppliers / customers, etc. stakeholders have important government effects on executives′ earnings management behavior, whose governance effects can be summarized as supervision effect, pressure effect and substitution effect; there is a significant difference in the corporate governance effect because of the difference in the nature, degree and function channels between stakeholders and corporate interests; the governance effect of stakeholder has the substitution effect, and its heterogeneity, corporate characteristics, internal governance mechanism and external environment can affect the cost and income of each subject, and eventually affect the corporate governance effect. Therefore, we should improve corporate governance effect of stakeholders from two aspects of strengthening internal governance mechanism and improving external environment, to maximize the effect of supervision and reduce opportunistic behavior brought by pressure effect.

Key words: stakeholders, external governance, earnings management, monitoring effect, pressure effect, substitution effect