Chinese Listed Companies. Asset Impairment Accounting

Assets Impairment accouting has been a hot topic in the field of financial accounting for a long time. China's Assets Impairment accouting has grown out of nothing, from two items to four items, finally to eight items and on February 15.2006, China issued accouting Standard for Business Enterprise No.8:Asset Impairment Accounting, Which has been put into practice since 2007. The New CAS No.8 putting forward the requirrment of Impairment sign, specificating the procedure of assets Impairment measurement, cancelling the reverse of the impairment of long-term assets, aiming to compressing the scope of earning management (Liu Yuting,2006) Then whether or not the change of assets Impairment standards will be achieve the goal of compressing the scope of earning management. Acctually, the object of changes in asset impairment starndards mainly is long-term assets, the short-term assets impairment hasn't changed, so firstly, we should analyze the objects are short-term assets or long-term assets of listed companies using for earning management? This will be determained that the changing of assets impairment standard whether or not chieve its policy effect. Accordingly, this paper will analyse the motivation of assets impairment of listed companies, and analyzing the different between short-term assets and long-term assets impairment on earnings management, and analyzing whether or not the changing of accouting standards can restrain the earning management through using the short-term assets impairment and long-term assets impairment.Meanwhile, The objective of implementating new accounting standards is to improve the accouting information's relevance and reliability, then as a part of accounting information, the assets Impairment information's relevance and reliability will have a significant changance between the old accounting standards and new accounting standards. And the different types of assets impairment's value relevant and reliability will be changed significant as well? Then what are the reasons for these significant differences. So this paper studies the value relevant and reliability of assets impairment information, including the difference between the old and new accounting standards stage, and the difference between the short-term and long-term assets impairment information.The study period is from 2001 to 2008, and its subject is assets Impairment accouting of public companies in the A-share capital market. The conclusions of this paper are including following main points:(1)The behavior of assets impairment of listed companies will be affected by the industry's economic boom and the performance of each company, when the external economic environment and the performance of company improved, the provision for assets impairment of listed companies is relatively low, or vice versa; while assets impairment will also be subject to earnings management behavior, if the loss companies can reverse its profit, it will reverse its profit by assets impairment, and it will take a bath by assets impairment when it can't reverse its profit; the assets impairment wll also be subject to the conservatism accounting principles, when the policies and estimates of accounting are conservatism, the proportion of asset impairment is more higher; the behavior of assets impairment will also be affected by contractual factors, when the assets-liabilities ratio is more higher, the proportion of asset impairment is more lower.(2) Because of the type of assets impairment for public companies'reversing loss profit is short-term assets, the new accounting standards prohibit reversal of Impairment of long-term assets can't play an expected role to restrain the behavior of reversing the loss profit by assets impairment; but it can play an expected role to restain the behavior of taking a big bath through assets impairment, because the public companies will taking a bath by using both the short-term and long-term assets impairment.(3) As a part of earning, the information of assets impairment has added valuerelevance; as different types of assets impairment information's value relevance, the public companies with reversing loss pofit and taking a big bath are significanty weaker than companies with the profit before assets impairment,; The value-relevance of assets Impairment is higer in the new accounting standards stage than the old accounting standards stage, while the increasing of value-relevance is due to the value-relevance increasing of short-term asssets and long-liveed assets.(4) The implementation of new accounting standards improves the accruals reliability of short-term assets and long-lived assets, and making the accruals of assets Impairment more reliability than the accruals of non-assets Impairment. As the different period assets impairment, the reliability of long-lived assets Impairment accruals is higher than the short-term assets Impairment accruals; As the different type assets impairment, earnings management like "adverse-loss" and "big bath" will reduce the reliability of impairment assets accruals. Summarily, although the implementation of new accounting standards has limited restained the earning management behavior by using assets impairment, but it has enhanced the value relevance and reliability of assets impairment information and prompted the usefulness of asset imparment information in decision-making.This paper provide a fresh insight into the assets Impairment accounting by our findings, especially the comparative analysis of assets impairment between the old accounting standards and the new accounting standards, we wish our research is beneficial to the study of assets Impairment in the China's capital market.