An Study On Earnings Management Of Loss Listed Companies In China

The capital market has being developed more than ten years in China. But compared with foreign capital market, the capital market of China is still younger, so there would be a lot of deficiency and defect unavoidable existing. Earnings management as the difficult problem of capital market in the world, is used by a lot of listed companies under the environment of unripe capital market of China. And also because of the particular system reason of China , the earnings management develops into a lot of listed companies to evade the special way to supervise. Because the stock supervisory committee has the rules for the losing list company, for example, special treatment, suspending and stopping on the market, in order to avoid these punishments, a lot of loss listed companies adopt the earnings management to achieve the goal of making a profit instead of suffering a loss This paper is generally about the earnings management of loss listed companies based on the special supervisory system to listed companies in China. First, this paper would define the earnings management by normative studying. Using the contract theory, information economics theory and rent-seeking theory to prove the motive of listed companies having earnings management. And also by combining the special situation of China , to prove the motive of loss listed companies having earnings management in China in further. Based on the biased methods of earnings management, this paper puts forward some factors which influence the selections of Chinese lose listed companies on earnings management methods. By presenting the example of China's capital market, to prove that the lose listed companies will intentionally select some earning management methods to achieve the goal of making a profit instead of suffering. Secondly, basing on the study in the foregoing paragraphs, this paper uses the empirical study to prove the motive of the loss listed companies in China, that is, the companies use the earning management actually, and increase profit instead of suffering a loss by making up the loss in that year, and prove the biased for the choice on earnings management methods. Finally, on the foundation studing in preceding paragraphs and the behaviors of earnings management of the loss listed company in China at present, the author would like point out some essential and beneficial policy recommendations. According to the writing thoughts of the whole article, this paper analyses step by step using normative study and empirical study, the structure of the paper is comparatively rigorous, and have certain theory meaning and actual meaning. The mainly Innovation of this paper as follows: 1.Study innovation, according to collection of documents at present , it is not find yet about the study of earnings management biased methods choice. 2.The innovation of the research contents, some points in the article are fresh, for example, the analysis of rent-seeking theory to motives of earnings management, the analysis that the listed companies choose the earnings management methods, and the empirical study of the choice on biased methods of earnings management. 3.The ending of this paper has put forward more innovating and constructive suggestions.