Research On The Path,Motivation And Economic Consequences Of ST Listed Companies’ Earnings Management

Earnings management is the behavior and process of maximizing the interests of an enterprise by controlling or adjusting accounting information on the basis of following accounting standards.Listed companies often meet some requirements by adjusting corporate earnings information.In the context of China’s special ST system,it is difficult for companies to achieve profitability within a year of special treatment through business transformation,increased revenue,and reduced costs.Therefore,many listed companies choose to adjust profits through earnings management to achieve profitability and ultimately avoid the suspension of their stocks.However,the company’s earnings management has not changed its business scope and profitable space.Although the whitewashing of financial statements can help listed companies avoid special treatment by the exchange in the short term,this move may make the company tireless in business transformation.What’s more,this move has seriously disrupted the order of transactions in China’s capital market.The whitewashed earnings information can mislead investors,especially small and medium-sized investors,which in turn leads to misinvestment and losses.This article analyzes the specific cases,analyzes the motives,paths and economic consequences of the case company’s earnings management,from how to avoid the listed company’s earnings management to avoid stock suspension and protect the interests of investors,especially small and medium investors Make recommendations on China’s existing systems and policies.In this paper,Pingzhuang Energy Co.,Ltd.is selected as the research object,and the literature research method,case analysis method and the combination of qualitative and quantitative methods are used to analyze it.Specifically,it is divided into five chapters: The first chapter is an introduction,which mainly introduces the research background,significance,research methods and contents,innovations and deficiencies,and literature reviews related to earnings management of the article;the second chapter is the theoretical and institutional background,mainly introducing The concept of earnings management,related theories and China’s delisting risk warning system;Chapter 3 is a case description,which introduces Pingzhuang Energy and its stocks selected in this article to successfully avoid delisting;Chapter 4 is a case analysis,targeting Pingzhuang Energy Analyze the motives,paths and economic consequences of earnings management;Chapter 5 is the research conclusions,recommendations and prospects,expounds the conclusions of the analysis in Chapter 4 and puts forward relevant suggestions,and puts forward prospects for this article.After observing the net profit in Pingzhuang Energy’s 2014-2018 financial statements,it was found that Pingzhuang Energy achieved profit in 2017 after two consecutive losses in 2015 and 2016.However,there is an abnormal trend in the change of its related financial indicators.Combining with China’s unique ST system and Pingzhuang Energy to avoid the pressure of suspending the listing of stocks,it was found that Pingzhuang Energy’s management has a surplus management behavior in the process of a year after its loss to a special treatment by the Shenzhen Stock Exchange.After analyzing the accounting subjects of abnormal changes in Pingzhuang Energy’s financial statements,it was found that Pingzhuang Energy managed earnings through asset impairment,asset restructuring,government grants,and related party transactions.During the analysis,the author found that Pingzhuang Energy took advantage of the industry’s development trends and policy background to adopt a more concealed path to whitewash accounting information.Pingzhuang Energy used the earnings management path it relied on to change its profit composition to a great extent,and finally succeeded in avoiding the suspension of its stock listing.However,after measuring the economic consequences of earnings management through the DuPont analysis method selected in this article,I found that Pingzhuang Energy’s move did not fundamentally improve its profitability.Therefore,the author believes that the imperfect relevant policies are one of the reasons that a large number of specially-treated listed companies over-exercise their residual management,so the policies need to be followed up in a timely manner;on the other hand,the supervision needs to be strengthened,proper supervision and strict information Disclosure will reduce the extent to which companies manipulate earnings management;furthermore,investors,especially small and medium investors,need to actively understand relevant financial knowledge.Only in this way can the rights and interests of investors be protected to the greatest extent.The current academic research on earnings management is more empirical,so I choose a different case method for analysis.In the analysis of Pingzhuang Energy,the profit management after the loss of the enterprise to prevent another loss is considered together with the earnings management to avoid the suspension of delisting,and the research perspective is broader.Since the author can only use the public data of the listed company for analysis,some of the data required for the analysis cannot be obtained from this channel,so there may be some incomplete or inaccurate analysis.The author will continue to study and research on it,hoping to produce more research results.