An Empirical Study On Cash Flow Manipulation In China's Listed Firms

Since the 1980s,more and more earnings management phenomenon has caused people to see the limitation of profit information.At the same time,people pay more and more attention on cash flow information because of its cash basis and the reality of corresponding cash and cash equivalent characteristic.People start to pay attention to the cash flow information in the financial reports.However,there are different opinions of the authenticity of cash flow information in theory and practice.First,we have a summary analysis about the reason for operators operating cash flow on base of defining cash flow and manipulation of cash flow.This thesis discusses reasons of the problem from two aspects,the realistic reason and the system reason.We also carry on the thorough discussion from the capital market,the enterprise operators as well as the market supervision.Next,this thesis carries on the classification to the methods of cash flow manipulation and the summary analysis to the manipulation consequence.The manipulation methods mainly include:(1) to constructs real transactions to adjust enterprise's cash flow;(2) to fictionalize transactions to adjust enterprise's cash flow; (3) to change corresponding relationships in the cash flow to adjust enterprise's cash flow;(4) to adjust enterprise's cash flow through related party transaction.The emphasis of this thesis is to conduct empirical study on manipulating cash flow or not.We select 397 manufacturing listed companies from 2002 to 2006 in the Shanghai Stock Exchange by the means of the distribution of Earnings.We discover that there is cash flow manipulation phenomenon at the zero-point threshold by measuring the limits differences of unit operating cash flow.In addition,to further confirm the existence of cash flow manipulation,we conduct paired test to the unit cash flow and cash flow per profit by selecting 23 manufacturing listed companies refinancing in 2003 and 2004 from Shanghai Stock Market.Meanwhile,we choose a same trade(second-level segmentation profession), close in scale and non-ST as control finns.After paired test,we find that the enterprises have cash flow manipulation obviously before refinancing,and the unit operating cash flow differs greatly before and after refinancing and passes significance test whenα=0.05.Cash flow per profit differs obviously too,but doesn't pass significance test whenα=0.05.The unit cash flow and cash flow per profit of control samples have no significant difference.We also discover that the margin of the unit operating cash flow has significant difference by doing paired test.In order to prevent enterprise's cash flow manipulation and achieve the goals of controlling cash flow manipulation,standardizing market order and promoting enterprise development we put forward a series of proposals from the aspects of capital market,the enterprise itself and so on.