Research On The Extraordinary Items Problem Of Chinese Listed Corporations

Extraordinary items are some unusual or infrequent transactions or events on contrary to frequent items. According to persistence of earnings, they are the weakest items in persistence. Each country has common agreement in the accounting of frequent items, but has much difference in the definition and disclose of extraordinary items.As we all know, recurrent earnings are characterized with the persistence and core income for a business, on the basis of routine income investors can make a predict on the potential capability of making a profit and development; they can't make their decisions on extraordinary items since extraordinary items belong to a kind of accidental and occasional items. If extraordinary items are arbitrarily made to distort the statement of income, this would result in the increase of price bubbles in the securities market. If share price incorrectly represents the strength of making a profit and development for a public company, it would be a disadvantage for capital to be prioritized and do harm for the individual investors to make their investments. For the time being, there have been a few researches and regulations on the features and dimensions of extraordinary items; therefore, it will be realistic and reasonable for the improvement of researches and their formulations.This article was divided into five sections; the first part covers the introduction, which includes the main issues concerned, the objective and significance of research, the statement of reference literatures, and the framework of the paper. The second refers to the theories related, which mainly includes the nature of the extraordinary items theory, the theory of earnings management, and the theory of accounting income. The third mainly researches on the definition of the extraordinary items. By comparison the provisions in other countries with that regulated by China Securities Regulatory Commission, and a number of new transactions, this paper studies the new definition of extraordinary items in the accounting guidelines. The fourth researches are on the presentation of financial statements and the disclosure of extraordinary item. By the comparisons and analysis of the current international disclosure, with the practice in China, this paper suggests an advice on the presentation and disclosure.