An Empirical Study On The Relationship Between Asset Impairment Of Listed Companies And Earnings Management

Earnings management is an enterprise which uses a certain accounting methods and means to achieve their utility maximization and the maximization of corporate value made to the accounting choice behavior. Its essence purposefully interferes with or affects the financial reporting, thereby affecting stakeholdersthe interests and decision making.It is a manipulation of profits, but it was also with the general sense of profit manipulation differ.Earnings manipulation is a clear violation by unlawful means to artificially inflate profits resulting or virtual cut. While the earnings management is to use the accounting standards and accounting system of choice, a conscious choice to favor its own accounting policy behavior.The back of provision for impairment of assets as a profit "reservoir" has always been a listed company into an important means of earnings management.Due to asset impairment accounting treatment of the corresponding need for accounting personnel, the accounting policy makes professional judgments.This provides the enterprise management of the enterprise or the selection of a favorable accounting treatment of its own opportunity to make provision for impairment of assets and the reversal of a listed company is one important means of earnings management.In 2006 the Ministry of Finance issued two "Enterprise Accounting Standards" related to impairment of assets which made a deal with the new requirements.Its purpose is to compress the water, a true reflection of corporate assets, impairment of assets adjusted to eliminate the use of the phenomenon of profit.The original accounting standards for impairment of assets compared to the new guidelines for the many changes have taken place:on the one hand, the new guidelines for the introduction of international accounting standards in the "asset group" "Headquarters Assets", "sale agreement price" concepts, proposed the "asset groupportfolio" concept; in individual asset, asset group, identification indications of goodwill impairment, impairment loss determination procedures, methods, measurement of the amount of such impairment has made a more detailed provisions.On the other hand, the criteria for the systematic and comprehensive enterprise fixed assets, intangible assets, long-term stock investments and other issues related to impairment of long-term assets to make a new specification, the other on the stock, measured using the fair value model of housing investmentreal estate, consumable biological assets and other assets, impairment issues in their respective standard guidelines.The accounting profession changes in accounting policy for impairment of assets evaluation. Impairment of assets in the new implementation of the guidelines later, is to effectively curb the behavior of earnings management of listed companies in the end. The extent of the impact, which is why this is necessary to study and answer the problem will be the new accounting standards as a research background to cities of Shanghai and Shenzhen. A-share listed companies as a sample of its 2007 and 2008 provides for impairment of assets to conduct descriptive statistics. From publiccorporate earnings management motivation perspective, the motivation for earnings management of listed companies classified were investigated with a different motivation for earnings management of listed companies impairment of assets. And on this basis, the use of regression models for multiple regression correlation analysis,mainly analyzes the use of provision for impairment of assets of listed companies. The results show that:(1) A listed company's anti-losses, losses are not motivated acts of its provision for impairment of assets had a significant effect on new asset impairment criteria for the implementation. (2)The losses of listed companies will be motivated by a loss of a substantial provision for an annual asset impairment. (3) The profitability of companies with good long-term asset impairment reversal is unlikely (4) Asset-liability ratio at the 0.01 level of significance test passed, but is expected to sign the contrary. It shows asset-liability ratiothe impact of impairment of assets is very obvious.In view of the above findings, this paper presents several aspects of the policy recommendations:(1) to further improve the accounting standards.In the future formulation and revision of the guidelines, should be as clearly as possible the choice of accounting policy for impairment of assets the right to strictly limit the accounting information may result in vague and distorted approach to minimize the accounting personnel man-made range of estimates and judgments to avoid the corporate executivesaccounting policies of the subjective and arbitrary, and constantly improve the quality of accounting information. (2) improve the business performance evaluation system.Recommended the establishment of an effective combination of short and long term performance evaluation index system, such as economic value added can be used, such as cash flow from operating activities as a core indicator; increasing earnings management, effective early warning indicators, such as impairment of assets affect the rate of profit target.(3). Improve the internal control system impairment of assets.Internal audit and supervision should be impaired through provisioning, recording and disclosure of the whole process of business processes to identify weaknesses and problems and help enterprises to establish a relatively reasonable impairment of internal control system in order to strengthen the corresponding internal management.(4) increase the quality of audit and supervision. Give full consideration to all sorts of possible factors that affect the provision for impairment to ensure that its substantive testing can be an objective and fair assessment of impairment of the audited entity extraction accuracy and fairness.(5) enhancing the ability to judge professional accountants.In addition to accounting personnel with a clear accounting expertise and capabilities, but also requires a comprehensive analysis and assessment of capabilities and extensive experience in enterprise management.To improve the overall quality of accounting personnel and accounting functions of the center of gravity changes, is the smooth implementation of the new guidelines for asset impairment of one of the ways. (6) to strengthen the asset impairment of audit, accounting firms and give full play to the supervisory role of certified public accountants, to ensure that the asset impairment accounting to good use.This study also has its own limitations. On the one hand, this paper is to study the implementation of new guidelines for the practical significance, so only the impairment of assets policy for the use of earnings management in this earnings management means are analyzed, with the related earnings management motives, and thus matching the sample selection.But strictly speaking, earnings management of listed companies may be based on a variety of specific motives, using various means, and the more hidden, it is difficult to quantify accurately, so the findings of this paper may be some impact, and need to be further in-depth, detailed research. On the other hand, this article from the overall inspection of listed companies based on different motivations of earnings management choices Impairment of assets policy differences, not specifically take into account the company's specific characteristics and industry risk, the findings may have a certain influence.Hope that future studies on this issue can be amended.