An Empirical Study On Asset Depreciation And Earnings Management In Share Split Reform Companies

The China Securities Regulatory Commission issued"notices related to the pilot of listed companies share split reform"on April 29,2005 and Share split reform officially kicked off. Share split reform aims to improve the liquidity of the securities markets,transparency,corporate governance standards and corporate value. The performance of listed companies can not change too much in the short term;however,it changed greatly before and after the share reform according to the published financial statements. Then whether or not listed companies make use of share reform to have earnings management?In many ways of earnings management,all the listed companies have the Provision and reversal for impairment of assets. Therefore,the paper means to research whether there has been a surplus of management behavior in the process of listed companies which have share split reform from the Perspective of assets Provision.This paper selects 771 listed companies which have share split reform in 2005 and 2006 as a sample,to study the changes of its Provision for impairment of assets before and after the share reform,measure the changes in effect of provision by Jones amended model and analyze the reasons for the changes. Studies find that to reduce the bargaining price level non-tradable shareholders paid to tradable shareholders in the share reform program,the listed companies which have share split reform have more motivation than other listed companies to reduce the previous year surpluses by Provision for impairment of assets. In order to maintain the confidence of investors, the listed companies which have share split reform have more motivation than other listed companies to increase the year surpluses by Provision for impairment of assets. Studies find that the share split reform brings more challenges to the monitoring of listed companies and the control of earnings management.