The Study On Earnings Management Of The ST Listing COmpanies

Earnings management is one kind of behaviors which aim to obtain gains for private purpose. The Shanghai and Shenzhen Stock Market Exchange have stated that those that appeared loss within two successive years or the owners' equity is below the amount of the registered capital fund should be special treated, and that only when these listing companies make profits in the next year can their stock be exchanged normally in the stock market. Till to 4,30th, 2001, 38 listing companies that were special treated had fled from the special camp. Such phenomenal leaded to our suspicions: had their managers managed the earnings in order to avoid the penalty from the stock market exchanges? This is because that under the theory of Earning Management, such listing companies had more motivations to manage earnings so as to take off the special restrain and protect their shells.Based on it, the paper built 3 hypotheses:(1) the companies treated special are likely to make income increasing accruals; (2) they use discretionary accruals items to manage earnings;(3) they are like to utilize current accruals to arrive at the goals. It is knew that the accounting standard of Cash Flow Statement began at 1998 and we only can got the data from 1998, so the paper tested 31 companies as statistical samples by three different models, which are the DeAngelo model, industry model one and industry model two. That should be pointed is that due to different accounting standards provided for the listing companies every-year such as 'Debt Restructuring' and 'Non-monetary Transaction', our test was implemented on different taking-off -regulation period. Our results under the DeAngelo model and the industry model two showed that there existed earnings management hi these 31 listing companies. To our surprise, the means of management were not by the current accruals as expected. Thus the first and second hypotheses are proved, but the third one failed. What's more, the studies on the biggest stockholder, the accounting firm and the forms of taking-off also proved the above result. At the end of this paper, some suggestions also had been given to relative facets in order to strengthen the restrains on the listing company treated special.Restricted by the matter that we can not got enough data and that the accounting environment is less satisfied, no doubt there existed some drawbacks in the paper.Although it, it can be said that the paper provided some helpful advice to the study on our stock market.