An Empirical Study Of China's Loss Of Earnings Management

China's listed companies started to implement new "Enterprise Accounting Standards" on January 1st,2007. In the context, the research objects of the thesis are 49 A-share listed companies, which are loss in 2007, and are profitable in 2008 in Shenzhen Stock Exchange and Shanghai Exchange, and this thesis aims to study the earnings management of these listed companies in 2008 under the new accounting standards.The thesis firstly reviews the concepts and theoretical basics of earnings management, and then analyzes the characteristics, positive and negative effects, motives and means of China's loss listed companies. Among them, the study suggests that there are some motivations to make loss listed companies process the earnings management such as the shell resource of listed companies, the flexibility of accounting standards and accounting system as well as the particularity of the delisting. Means of earnings management mainly are the use of non-recurring gains and losses, changes in accounting policies and accounting estimates, as well as the related-party transactions.By analyzing the proportion of loss-making and reasons of loss of A-share loss listed companies from 1993-2008, this thesis sums up the basic characteristics of loss listed companies such as the longer listing, the higher loss ratio; relatively decentralized ownership structure, higher ratio of non-business big shareholders; large amount of accounts receivable, and long aging; the large amount of overdue loans, and the increased litigating cases; and also the high proportion of the non-standard audit opinions.The empirical part of this thesis mainly analyzes whether the earnings management behavior exists in loss listed companies at the turnaround year, and whether there exists preferences to select the earnings management. Between them, for the former question, the thesis carries on the descriptive statistical analysis on the discretionary accrued profit of loss listed companies at the turnaround year by using the DeAngelo model, and empirically analyzes the discretionary accrued profit and the net change by taking respectively the T test, Wilcoxon symbols rank test to analyze the mean and median. These confirm the hypothesis one of the study:loss listed companies will make the accounting treatment increase the revenue at the turnaround year. And it analyzes descriptive statistically the non-recurring gains and losses of samples in 2007 and 2008 to suggest that loss listed companies use the non-recurring gains and losses to make up the deficits and get surpluses in 2008. For the latter issue, it selects four variables to establish a multiple linear regression model, which are main business profits, the net of non-operating income, investment income and asset impairment losses. The regression analysis confirms the Hypothesis Two of the study:there is a certain preference in the choices of earnings management for loss listed companies at the turnaround year. According to the theoretical analysis and empirical studies, this thesis suggests that under the new accounting standards, loss listed companies does exist the earnings management behavior at the turnaround year, and there is a certain preference in the choices of earnings management. The best preferred method is to adjust the main asset impairment losses; the second preferred method is the net of non-operating income; the last is investment income.Combining with china's new accounting standards, it puts forward some countermeasures and suggestions for the study of earnings management of loss listed companies from three aspects which are improving provisions about the delisting of listed companies, reconstructing the corporate governance structure, and perfecting the construction of new accounting standards.