| "Debt Restructuring" accounting standard experienced 3 changes respectively in 1998,2001 and 2006. The target of the revision in 2001 is to curb listed companies’ abusing of debt restructuring as a means of earnings management, and the abusing was triggered by the 1998 standards. In 2006, "Debt Restructuring" accounting standards was revised again along with the establishment of a new china accounting system, which was in order to realize the convergence with IFRS, the 2006 standards is basically consistent with the 1998 one.Repeated changes of the standards triggered a wide range of academic attention on debt restructuring, especially consequences of the 2006 guidelines’ implementation. Lots of issues mainly focus on the relation of earnings management and debt restructuring were published in recent 15 years. These studies only evaluate the pros and cons of the debt restructuring by whether it is used as the means of earnings management, and ignoring that the debt restructuring are originally alternative pathway of bankruptcy that is used to reduce bad debt treatment costs and help the troubled enterprises out of financial difficulties and improve performance. That means the most direct and effective standards of evaluating the quality of debt restructuring is ought to be if it can improve the perform of the troubled firms, and the evaluation standard should not to be if it is related to earnings management; Second, these studies mainly starting from the debtor’s view, ignoring the creditors are the receiving party in the contract of debt restructuring, and not differentiating the different performing of the debt restructurings that is conducted by related party creditors and other creditors; Third, these studies ignore investigating the origin of earnings management and the relationship between earnings management motivation and debt restructuring perform.Therefore, this article attempts to research on the effect from the implementation of the debt restructuring in three levels:(1) Test on whether the troubled company’s long-term performance after debt restructuring is better compared to counterpart one that is without debt restructuring; (2) Examine whether the related-party debt restructuring company’s long-term performance are different with non-related debt restructuring; (3)Study on the effect of the debt restructuring events on the stock market.First, this paper attempts to examine the implementation performing of the debt restructuring by the long-term performance of the financial-difficulties companies after debt restructuring, and further analyze the earnings-management motivation’s effect on the implementation performing and the main ways through which it acts, then further more analyze cause of the earnings management motivation of financial difficulties the company. Secondly, this paper attempts to examine debt restructuring performing’s "differences" of the related-party creditors and non-related-party creditors, while the introduce the "Propping" theory and the "Asymmetric Information" theory to analyze debt restructuring behavior of related party creditors, and then further analyze the earnings management motivation how to affect related party creditors’ "Propping" behavior and its effect on the implementation performing of the debt restructuring. Finally, from the efficient market hypothesis, this paper analyzes and tests the short-term market reaction to the event of debt restructuring.In order to achieve the above research purpose, this article use 10-year debt restructuring company sample from 2001 to 2010, theoretical analysis and empirical research from different levels and angles on those questions, the conclusions as follows:First, this paper investigated the market performance and accounting performance of the financial difficulties corporate after its debt restructuring; then splits the sample into two groups by the two periods of the 2001 standards and the 2006 standards. This paper found that the implementation performing of the debt restructuring has no obvious effect on improving the financial difficulties company’s performance; During the period of 2001 standards, the company’s after debt restructuring performance improved; During the period of 2006 standards, and the long-term performance of after debt restructuring company was deteriorated markedly; the implementation of the new standards deteriorated the debt restructuring company’s long-term performance.Secondly, this paper research on the market performance and accounting performance of the related-party debt restructuring, then test it by group trips by two standards periods and cross variables; then examine concessions extent of related party creditors by their choice of debt restructuring mode; and found that the performance of related-party debt restructuring is not better than the non-related party one in the whole sample period; and it is better than he non-related one during the 2001 standards period; and it is worse than the non-related one during the 2006 standards period. At the same time, the concessions extent of related party creditors is more than the non-related ones whether in the whole sample period or the 2001 guidelines period or the 2006 guidelines period. All of those shows that the creditor’s concessions extent is more than the non-related ones, but its performance is not better even worse than the non-related ones, and this situation is more worse by the impact of the earnings management motivation of the troubled company in the 2006 standards period.Finally, this article study on the short-term market reaction to the event of debt restructuring, and examine it by splitting the sample into different trips according to the two standards duration and different creditors sort. Found that, during total period, the market have a positive short-term market reaction to debt restructuring events, and the more positive short-term market reaction to events of related-party debt restructuring; and the above results is no difference in the 2001 and the 2006 guidelines durations.According to the above study results, debt restructuring can play a role to improve the performance of the financial difficulties company in the absence of earnings management motivation; and the earnings management incentive would lead to the deterioration of the performance of the debt restructuring companies. Therefore, from the angle of improve the troubled company’s performance, debt restructuring is ineffective by the motivation of earnings management, is a waste of economic resources. The related debt restructuring which is of more concessions extent also is efficient in improving the performance of the financial difficulties company than the non-related ones in the premise of no earnings management motivation, and the related one performs worse than the non-related one within the impact of the earnings management motivation. Therefore, there is invalid of the related debt restructuring for the troubled company’s recovery under the earnings management motives. There is no difference of the short-term market reactions between the debt restructuring events especially related debt restructuring events in different EM motivation periods means the investors cannot see through the bad quality of (related party) debt reorganization in the EM motivation period of 2007 and later. The earnings management motivation which lead to deterioration of the debt restructuring company’s performance is rooted in the needs of protecting the listed qualifications (we call it "shell") of the financial distress of listed companies, the high value of the "shell" is from China’s strict regulation of financing qualifications in capital market and the current situation of narrow financing channels. The regulation is represented by the regulatory system and rules of listed companies.Therefore, this study shows that the earnings management motivation which is rooted in protecting the "shell" is the fundamental reasons leads the inefficient of debt restructuring, only changing the existing regulatory rules of the stock market and reducing the value of the "shell", we can fundamentally solve the impact of the earnings management motivation on the quality of debt restructuring, and make the debt restructuring play its due role.
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