Research On The Issue Of Goodwill Impairment From The Perspective Of Earnings Management

At the beginning of 2019,China’s A-share market witnessed frequent goodwill impairment thunders.A number of listed companies withdrew huge amounts of goodwill impairment.In the entire industry of A shares,due to the huge amount of goodwill disclosed in the accounting statements of the film and television industry,it has become the hardest hit area for impairment thunder.The reason why the film and television companies have a large amount of goodwill is mainly because the industry is full of behaviors of repeatedly choosing high premium acquisitions of star shell companies in order to snatch scarce resources(stars).The huge amount of goodwill brought by high-premium mergers and acquisitions created a lot of room for film and television companies to use goodwill impairment for earnings management.At the same time,in the past two years,in order to reduce the risk of goodwill impairment in the capital market,domestic management institutions and academia have called for the subsequent measurement of goodwill to be changed from the impairment test method to the amortization method.The company’s amortization means that the company will bear the losses caused by the impairment of goodwill every year during the amortization period,and the film and television industry is also likely to face a loss.This latest accounting trend will also lead to earnings management motivation for film and television companies.Based on this background,this paper selects the typical case of Huayi Brothers for research.Through this case analysis,it explores the motivation,opportunity,and economic consequences of Huayi’s use of goodwill impairment for earnings management,and proposes universal suggestions.The paper mainly adopts literature data method,case analysis method and analytical induction method to study and analyze.First,the paper reviews the research results of goodwill impairment,related research on earnings management,and the relationship between goodwill impairment and earnings management through a literature approach.Secondly,the case analysis method is used to analyze the mystery of the impairment of goodwill of Huayi Brothers,and the motivation of Huayi to use goodwill impairment for earnings management is to alleviate the pressure on performance and the "big shower" motivation.It was found that the opportunity for Huayi to use goodwill impairment for earnings management is mainly due to the high premium mergers and acquisitions in the film and television industry,which provides room for goodwill impairment.The impairment test procedure has given managementdiscretion and insufficient disclosure of goodwill impairment.In addition,it was also found that when there is a lack of excellent targets for mergers and acquisitions,it will have a negative impact on the company’s stock price,and earnings management of the impairment of goodwill will also reduce the company’s stock price.Finally,in view of the current problems of goodwill impairment,corresponding measures are proposed at the standard and regulatory levels.It is believed that changing the subsequent measurement method of goodwill to amortization method can better inhibit the current goodwill impairment for earnings management.The innovation is that the current related research takes all domestic listed companies as the research object.However,in practice,the film and television industry is one of the industries that are most prone to the issue of goodwill impairment.Therefore,the study of goodwill impairment earnings management in the film and television industry can not only supplement the theoretical gap,but also have important practical significance.At the same time,the current literature uses empirical analysis to verify the relationship between earnings management and goodwill impairment.There are few case studies on goodwill impairment earnings management.The case studies in this paper will make this area more in-depth.