This study is based on the electronic companies listed in Taiwan stock exchange from 2015 to 2019. The purpose of this study is to explore the relationship between govern-ance of directors and the degree of earnings management. The empirical results showed that board director’s shareholding ratio, chairman and managing director, and manger’s shareholding ratio were all positively correlated with the degree of earnings management when the accruals was more than or equal to 0.25 quantile, which sup-ported conflict of interest hypothesis. Besides, when companies have an incentive, and will carry out accruals earnings management and real earnings management, which supported that the relationship between the two earnings managements are comple-mentary. On the other hand, when the chairman and managing director, and the board director’s shareholding ratio is increase, and the administering authority will use accruals earn-ings management and real earnings management to adjust financial statement figures at the same time, and even the big4 accounting firms unable to exert its check and balance. Finally, when companies only make slight adjustments to earnings, they usu-ally choose only one of the earnings management methods to make adjustments. In this case, the relationship between the two earnings managements are substitutional.
