Abstract: Taking China's A-share listed companies from 2013 to 2016 as research samples, the paper adopted Bootstrap method to examine the effect of financial connections on earnings management, and the mediating effect of the three kinds of agency costs of equity, debt and control on the relationship of the two sides. The study found:There are significant negative impacts of financial connections on both accruals and real earnings management; between financial connections and accrual-based earnings management the equity and debt agency costs play a partial intermediary role, meanwhile the role of the agency costs of control is nothing special; between financial connections and real earnings management the mediating role of the three kinds agency costs is not obvious.

Key words: financial connection, agency costs, accrual-based earnings management, real earnings management