Quoted Company Earnings Management And Preference Equity Re-financing Issues Research

Research in quoted company's earnings management and issues of preference of equity re-financing .Earning management is a strategy used by the management of a quoted company to deliberately manipulate the company's earnings so that the figures match a pre-determined target. This practice is carried out for the purpose of income smoothing. Thus, rather than having years of exceptionally good or bad earnings, company will try to keep the figures relatively stable by adding and removing cash from reverse accounts. Although, the different methods used by manager to smooth earnings can be very complex and confusing, the utmost goal is to gain personal profits, specifically, manager uses earnings management to raise fund, avoid tax ,obtain political asset and elude the constrain of debt contract.China stock market has been developing steadily in recent years. However, there were a series of cases explored which brought up with great challenges for accounting information in terms of the authenticity and reliability. The preference of equity re-financing is becoming a driving force for quoted company's earnings management to be carried out to raising more fund in the market, delivering false financial report. The consequences for quoted company's actions were causing obvious outcomes. The company's real financial report was disguised by better figures which misled investor's decision analysis and increased the difficulty for watchdog supervisory. Identifying company's earnings management is important for better master company's financial situation.The research was aiming for the earnings management issues. The analysis was starting from the understanding of basic concept of earnings management and manipulating accounting reports to point out the motivation and tactics of earnings management. Then the further study for preference, environmental and political issues of equity re-financing were carried out to deeply probe the reasons for earning management. Finally, the research presented the counter policies and view points for earnings management.