Empirical Research On Earnings Management And Valuable Relevance Of Nonrecurring Items

Earnings management is a kind of behavior that the present managers in theenterprises, based on following the accounting standards, control or adjust externalreports of accounting income information for enterprises to achieve the purpose ofself-interest maximization; while nonrecurring items is a kind of one-time oroccasional profit and loss company generate abnormally, not concerning withmanufacturing & managing normally activities. Generally speaking, the insiders ofthe listed company often use nonrecurring items to decorate its abilities of theprofitability, which affect the external subjects on the listed company's valuejudgment. This behavior through charging nonrecurring items has been one of theimportant ways of earnings management. Therefore, researching the earningsmanagement and its influence on stock price of listed companies on nonrecurringitems has theoretical and realistic meanings.Main work about this paper is as follows:(1)From the two angles of earnings management and value relevance aboutnonrecurring items, this paper analyzes relevant rationale respectively and domesticand foreign researching results(2)About earnings management, this paper studies the listed companies losing inthe first year and the listed companies making up the deficits and getting surpluses in2009. This paper adapts descriptive statistical analysis and distributional assay toverify the inspection of overall existence about earnings management ofnonrecurring items to two samples; in the meantime, about the preference to earningsmanagement of nonrecurring items, this paper makes a linear multi-regression modeland get conclusions:①The listed companies who lost in first year incline to usenonrecurring items to lower income for earnings management.②The listedcompanies who make up the deficits and get surpluses trend to use nonrecurringitems to handle accounts through increasing income for earnings management in theyear of making up the deficits and getting surpluses.③The listed companies whomake up the deficits have preference in selecting methods in earnings managementof nonrecurring items in the year of making up the deficits——nonrecurring itemsare good ways for earnings management and order in preference is: netnon-operating income, subsidized revenue, investment income. (3)About value relevance, this paper selects 3937 samples from Shanghai stockmarket A from 2006—2009 as researching objectives by using descriptive statisticsmethod and empirical method and classifies the samples into profitable companiesand losing companies. And this paper analyzes respectively the influence ofnonrecurring items on share price. Get conclusions:①Whether profitable companiesand losing companies, the relationship between nonrecurring items per share andshare price is not significant;②The relationship between earnings pershare(deducting nonrecurring items) of profitable companies and share price issignificant, but the characteristics in loss-making companies is not significant;③Forprofitable companies, the relationship between earnings per share(deductingnonrecurring items) and share price is more significant than nonrecurring items pershare. For losing companies, the relationship between nonrecurring items per shareand share price is more significant than earnings per share(deducting nonrecurringitems).(4)According to the conclusion, this paper presents correspondingcountermeasures and suggestions.