An Empirical Study On Earnings Management Of Listed Companies From The Fair-value Perspective

Since January 1,2007, All the Chinese listed companies have adopted the new accounting standards. It is a symbol of convergence of Chinese enterprise accounting standards with the international standards. It is also recognized as the inevitable result of the development of market economy in China. Comparing to the old accounting standards, both in the quantity of standards, or in the accounting methods, the new accounting standards changed substantively. One of the biggest changes is the adoption of fair-value measurement attribute. The fair-value measurement attribute is not only used for measuring financial instruments, but also for other assets in special standards. The exchange of non-money assets, debt restructuring and other 17 special standards in the new accounting standards adopt fair-value measurement attribute in varying degrees. The wide range and the intensity of application aroused widespread concern in theoretical circles. Could the wide application of fair-value play its expected role? How does it affect earnings management of listed companies? Further study on those problems will has important theoretical and practical significance for the implementation and improvement of corporate governance, enhancement of CPA independence, completing of a sound legal system, and optimization of allocation of resources in the capital market.Based on the previous studies, the normative study on fair-value and its impact on earnings management are included in the paper first. Then the empirical study on earnings management about various assets and trades, like trading financial assets, available for sale financial assets, investment property, debt restructuring, non-monetary asset exchange, are constructed and reported.5416 sample from 2005 to 2008 in Shanghai and Shenzhen Exchange are selected in paper, and the modified Jones model is used as a tool. The direct impact of new accounting standards on earnings management from the perspective of fair-value is tested mainly by regression and comparison. The main results summarize as follows:the change in fair-value through profit or loss of trading financial assets is not used as tool of earnings management by listed companies; Some listed companies may manage earnings by decreasing or omitting impairment losses, but it is not found that the debt restructuring and other non-operating income are used for earnings management; Profit-making enterprises are more likely to increase earnings than the loss-making enterprises; Loss-making enterprises are more likely to decrease earnings than the profit-making enterprises; Turn-loss-into-gain enterprises implement earnings management not after the adoption of accounting standards, but before that. The study also found that auditing has some capabilities in distinguishing the conducts of earnings management of decreasing profit; the impact of fair-value measurement on earnings management differs in various industries, and the real estate business is always in the top rank of earnings management by using fair-value; The trend of earnings management from 2005 to 2008 is not a decrease but a increase. As a conclusion, I think, although the new accounting standards the actually improve the relevance of accounting information, but does not effectively curb the earnings management of listed companies. Therefore, how to strengthen the disclosure and regulatory supervision of fair-value information is an important issue for supervision departments.