Research On The Current Assets Impairment Of Earnings Management

On February 15,2006 the Ministry of Finance promulgated the "Accounting Standards No.8—Impairment of Assets" to asset impairment confirmation,measurement and disclosure has made the very big revision,the most noticeable is that "as soon as the asset impairment loses passes through the confirmation,in the later accounting period do not be back." From the curb earnings management point, suppress the phenomenon use assets impairment for earnings management has an important role. However, liquid assets, such as inventory and receivables, their impairment in the company's assets impairment represent a significant proportion. According to the Securities Times Information Department statistics, by the end of 2005, listed companies provision for assets impairment in preparation for bad debts, accounting for 49.42 percent, decline value of inventories accounted for 9.72 percent, accounted for 60 percent. Clearly, "Impairment of Assets" criteria for switching off the door impairment in fixed assets and long-term impairment back to manipulation, but the current asset impairment provision and back the means of manipulating the company can still use.In this paper,we uses the empirical analysis research technique, the 2002-2007 listed companies provision liquid assets impairment and back were studied. The empirical results show that:the total current assets impairment in 2005 and 2006 appear greatly reduced, but still its share of 60 percent or more listed companies that liquid assets for impairment and back to the provision of clear higher than the long-term assets, and back to the provision of current assets for impairment on the impact of profits significantly higher than the long-term assets in the loss of listed companies, provision for losses less than the amount the company has obvious use of current assets provision for impairment of the signs do big losses in the company in reducing loss, greater than the amount of profits back to the company for more inclined to use liquid assets for impairment to back swung; the company which achieved the share matching capital ruled lines did not significantly improve the use of surplus liquid assets for impairment of opportunism.