Analysis On The Influence Of Assets Impairment Provisions To Earnings Management In Our Country

There was much room for self-regulation in the respect of extracting and reversing asset impairment for listed companies in the original "Enterprise Accountant standards", which gave companies the opportunity to whitewash Accounting Statement. Accounting polices on impairment of assets was adopted by the listed companies as a tool for profit manipulation and affected the accounting information the authenticity and reliability. In February 2006, the Ministry of Finance promulgated the newly issued "Rule of Corporation Accountant" which prescribed that fixed assets, intangible assets, the long-term equity investment and the construction of projects, once extracted, cannot be turn back. The relevant accounting standards can decline profit margin of listed companies to some extent, achieved by extracting and reversing asset impairment. It can vouch for the truth and comparability of accounting information, and it meets a much higher quality of accounting information. But this regulation still has some room for earnings management.There five chapters in this paper, and the main contents are as following:Chapter one is a brief introduction to this thesis .This part introduces the research purpose firstly, then defines asset, assets depreciation and earnings management, tells us the literature review, research ideas, as well as innovative points finally.Chapter two is about the theoretical analyzes of assets impairment accounting and earnings management. It mainly introduces the theoretical basis for assets depreciation accounting and the essence of it, the relation of assets impairment accounting and the relevance and reliability, the motivation and methods of enterprise earnings management etc.Chapter three is the impacts of the current standards for assets depreciation accounting on surplus management. It analyses how the existing standards for assets impairment accounting in our country restrain surplus management on the basis of comparison between the present and the former. Take Huaxin company as an example, it verifies the standards for assets depreciation accounting can restrain earnings management to some extent. The fourth part is data analysis for earnings management with assets impairment. It statistically analyzes extracting and reversing of 42 listed companies asset impairment, and the results show that the current standards can not control listed companies' manipulating earnings behavior fully.Chapter five points out some problems existed and suggestions in the process of assets impairment accounting implementation.This paper is distinguished as: (1) Take Huaxin company as an example, In accordance with Article X in "Impairment of Assets" "After the loss of assets impairment has been recognized, it can not be reversed ", the author gets the conclusion that the current standards can control listed companies' manipulating earnings behavior to some extent by re-calculation of profits on the basis of the basic data in 2005 and 2006 Annual Report. (2) To take 42 listed companies as samples, the author analyzes whether assets depreciation can contain profit manipulation or not, and the result shows that there exist some problems in the course of implementation of the current standards which cannot contain the listed companies to manipulate profits.