Empirical Research On The Profit Manipulation Of The Listed Companies Under The New Accounting Standards

According to the study of accounting field, the phenomenon that companies for some motivation provide false information to manipulate profit has been common, especially evident in listed companies. This behavior has seriously affected China's capital market. In order to prevent companies from manipulating profit, preserve the development of national economy, the government always regulate the behavior of listed companies through accounting standards. The Ministry of Finance in China announced new accounting standards system on February 15,2006, Which include one basic standard and thirty-eight specific standards, and on January 1,2007, listed companies take the lead in executing this standard. This great change in China has given rise to wide attention of whole society including global society. The introduction of new standards is advantage or disadvantage? This issue also caused a fierce discussion.This paper begins with the discrimination between profit manipulation and earnings management, and definitely points out that the research extent of profit manipulation in this paper is to increase or decrease the profit by illegal means. There are many reasons for listed companies to manipulate profit. This paper analyzes the reasons of this behavior from inner motivation and exterior factor, and then analyzes their instruments of profit manipulation in order to find out the identification methods for the user of information. Through the analysis of some specific items of new accounting standards, draw a conclusion: the execution of new standards brings great concussion to traditional instruments of profit manipulation. But new standards absolutely controlling the behavior of profit manipulation is impossible, at certain extent, new standards even enlarge the space of profit manipulation. Therefore, profit manipulation can only be refrained instead of being eliminated. Based on the above theoretical analysis, this paper makes empirical research to the degree of profit manipulation of listed companies from 2006 to 2008, using non-parametric tests with the extensional Jones Model. At last, give some advice to control the behavior of profit manipulation of listed companies according to the empirical results, to strengthen the precaution against the profit manipulation of listed companies, and promote the new accounting standards further improved.