Research Of Provision For Impairment Of Assets Of Listed Companies

In February 15 2006, the Ministry of Finance issued the "Accounting Standards for Enterprises No. 8 - Impairment of Assets", which make a more clear and detailed requirements in impairment of assets, recognition, and measurement. Its purpose is that avoid enterprise from earnings manipulation by Impairment of Assets Policy since the "enterprise accounting system " implemented,and provide more effective information for the secondary market by reflecting the asset quality more real and firm. So, whether the new implementation of guidelines for impairment of assets achieve its intended purpose? Economic factors affecting the asset impairment provision can become a major factor? Whether the enterprise is still a strong incentive of earnings management by the new policy? When reversal of impairment of long-term assets is not allowed, whether the companies get a new way of earnings management by asset impairment? Whether the new policy promotes companies providing more effective information? These are the main focus of the article which concerns the results of provision for impairment of assets of listed companies.This article contains three empirical analyses: the first one, which is a comparison before and after the new policy carried out, is about the linkage between the provision for impairment of assets and economic factors and earnings management factors. The second one, after the implementation of new standards and asset impairment of assets are disposed of or replacement of assets, etc. is combined to make an empirical study of Earnings Manipulation. Third, after the implementation of new guidelines for Enterprise Assets value relevance of accounting information were compared. Study found that the implementation of new guidelines enhance the value relevance of accounting information to provide investors a more effective information.