Under Chinese institutional background, block holders have the incentive to make non-efficiency decision and to manipulate earnings information, which would affect the company's the capital market response and future profitability. After reliability testing of the main variables, this paper examined whether the implementation of investor relations could constraint the earnings management behavior of inners and improve the quality of the information. According to the results of empirical analysis, we got the following conclusions: The higher the level of investor relations, the lower level of earnings management. The implementation of investor relations increased external communication, which could be able to force the company to improve the information quality. This could enforce block holders to re- consider the cost of encroaching the interest of small and medium shareholders, and the containment of investor relations to the behavior of controlling shareholders pursuing private benefits was also supported by the examination result. So, the evidence of this paper supported the theoretical assumptions which investor relations could reduce the "moral hazard", and then optimizing corporate governance.
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