Great Star’s Earnings Management Strategy And Its Impact Under The Background Of Sino-US Trade Friction

In August 2017,U.S.President Trump signed a presidential memorandum instructing the Office of the United States Trade Representative to initiate a "301" investigation into China,which kicked off a new round of trade friction between China and the United States.In this China-US Trade Disputes,Chinese companies in related industries have to face tremendous pressure.In order to avoid overreaction by the market and further deterioration of market valuations,most of the listed companies involved in the U.S.government sanctions related industries have issued announcements that the Sino-U.S.trade friction has "little impact" on them.Based on previous studies on the impact of Sino-US trade frictions on corporate earnings management strategies,selects Great Star as the research object to specifically study the object’s earnings management strategies and their impacts in the context of Sino-US trade frictions.Based on the detailed introduction of Great Star’s background and Great Star’s response to the aforementioned tariff increases,this paper analyzes the impact of Sino-US trade friction on Great Star’s business,Great Star’s earnings management strategy,the market and external agencies’ recognition of Great Star’s earnings management strategy,and the analysis of Great Star’s motives for its response earnings management strategy in the context of Sino-US trade frictions.The research in this article found that:(1)Sino-US trade friction will still have a negative impact on Great Star’s revenue,especially foreign region income.(2)In the context of intensified Sino-US trade friction,Great Star has chosen an upward earnings management strategy,however,the degree of earnings management is relatively light.(3)In the short term,market investors did not recognize Great Star’s upward earnings management strategy in the context of intensified Sino-US trade frictions.In addition,by inquiring about the audit opinions and internal control assurance reports from accounting firms,exchange inquiry letters or regulatory letters,etc.,no external institutions have been found to have made obvious responses to Great Star’s upward earnings management strategy.(4)The motivations for choosing upward earnings management strategies in Great Star mainly include raising market valuations,maintaining a growth trend to facilitate borrowing from banks,and meeting financial analyst expectations.The innovations of this paper are:(1)theoretically,it enriches the case studies of earnings management strategies of listed companies under the background of Sino-US trade frictions.This article uses Great Star as the case study object to study the impact of trade friction on the upward earnings management of Chinese listed companies,and provides examples from emerging markets for upward earnings management strategies.(2)It enriches the research on the economic consequences of trade friction,especially the impact on the information disclosure of listed companies.(3)Through the study of Great Star in this article,it can remind the regulatory authorities to supervise the information disclosure of listed companies under the background of trade frictions and other exogenous impacts,thereby protecting the interests of small and medium shareholders.