China A-share Listed Companies, Fair Profit

Book profit should be fair profit and it's the requirement of fair competition principle under market economy. It's the responsibility of top management as assignee to adhere to accounting principles comprehensively and prevent from any violation, which is as well required by the fair competition principle. It accords with the principle of maximum of investors' benefit and also serves as a systematic restriction to prevent investors from unfair competition behavior.The newly circulated accounting principles introduce fair-value accounting, which makes financial reports more useful and relevant for decision-making. Fair value has raised more and more attention from investors and creditors because of its high relevancy. Apparent unfairness in accounting practice leads to unfairness in book value. Theoretically, fair profit is the book profit based on fair value exchange. Practically, fair profit refers to the book profit on precondition that all the accounting methods are compliant with standard accounting principles and market competition has been fully taken care. Detailed speaking, if a listed company has disclosed its financial reports whose accounting methods have properly considered the fixed assets depreciation, bad debt provision, impairment loss for investment, government subsidy, premium on assets disposal, contingent liability, related party transactions etc. and meanwhile, there is no significant competition gap between this listed company with other companies, especially its fellow company in the same industry, we can say that the disclosed book profit in that company's financial reports is the so-called fair profit. Otherwise, it's not fair profit. To maximize fair value of the company is not only pursued by the management of the company but also chased by investors, creditors and other concerned parties who are using the financial reports. However, trustless company structuring always leads to unfair maximum of book profit, which is different from fair profit maximum. And consequently the unfair book profit cannot truly reflect the value of the company and information quality disclose in the financial reports gets so seriously impaired that reports users are mislead in their business decision making.The purpose of study on fair profit is to revert to the trueness of book profit and improve accounting information quality to meet the needs of investors and creditors. As far as methodology concerned, we have conducted compliance test between the accounting methods in practice and standard accounting principles, and use those companies adhering well to the Principles as reference to adjust book profit to fair profit by One Package Approach. It's worth to mention that the risk of fairness in book profit get released by adjusting accounting methods.This thesis is composed of 4 parts. The first part gives a brief introduction on the background of and progress in fair value and fair profit study. The second part expatiates the affecting factors for Chinese listed company fair profit study, such as, how to judge the fairness for bad debt provision, fix assets depreciation, government subsidy, impairment loss of long-term investment, premium of assets disposal, contingent liability, usage fee for funds utilization etc. which are illustrated by the study on Shenzhen Great wall Development Technology Corp. Ltd. The third part is mainly case study. We have taken certain ST companies in Chinese stock market as samples and using the One-package-approach to adjust the book profits to fair profits before tax. The last part gives some constructive suggestions on disclosure of fair profit for Chinese listed companies.