The Empirical Research On Income Smoothing Of Profitable Companies By Assets Impairment

One of the most important means of listed companies manipulate surplus is to back through the asset impairment. Before the implementing of the New Accounting Standards in 2006, taking back impairment of asset is permitted as long as the condition is reasonable. Therefore, for the purpose of reducing the political costs and have an advantageous position, some listed companies may take more asset impairment in good income annual, and take less or back impairment of assets in the poor income annual, so as to achieve the purpose of regulating profits.1 January, 2007, the New Accounting Standards will be put into practice. The guidelines require that once the provision for impairment of long-term assets may not be back. It would limit listed companies effectively manipulate earnings through the impairment of long-term assets. As for the listed companies who prepared many long-term assets impairment, the assets impairment will be wasted if they didn't take it bake before the implementation of the guidelines. Therefore, listed companies may have the motive of return long-term assets impairment in 2006. In this paper, we make a research based on the system background.We use descriptive statistics to study the situation of long-term assets impairment to explore whether there is the use of long-term Impairment of Assets manufacturers prepare for the performance of profit, and then through the coefficient of test, test whether income smoothing existences in the profitable companies, and finally use 2 logistic regression to analysis the factors that affect the income smoothing. The empirical results show that there is an obvious return of long-term assets impairment from 2003 to 2006, and the profit companies that return assets impairment in 2006, have do income smoothing significantly. From the sample date of profit companies, the assumption of debt contracts, tax assumptions, the profitability of the business assumptions and the assumption of concentration of ownership have been verified. However, assume that scale did not pass the test of significance. It shows that in our country, the profit companies with high the rate of assets and liabilities, great income tax expenses, weak profitability of the business and low concentration of ownership, are more likely have the behavior of income smoothing.This thesis looks forward to make a contribution on the study of income smoothing, and put forward some suggestions for the income smoothing.