Four Provision For "empirical Research On The Impact Of Loss Listed Companies

Normative Accounting is a classica~ method that depends on induction and deduction. Positive Accounting, unlike Normative Accounting, verifies the correctness of theory based on the fact. In Positive Accounting, as understood in the accounting literature, there are three criteria for a good theory: It seeks to explain what is, rather than what should be. It leads to testable hypotheses. It produces more accurate predictions than competing theories. The tenuous foundations of market efficiency theory seem to have, in part, motivated two researchers (Watts and Zimmerman) to pioneer 揚ositive Accounting Research?in the late I 970s. The paper based on Accounting Forms in 1999, selects 20 loss companies of listed as sample, researches the earnings management, and then clarifies the necessity of 揟he Four Impairment Allowances? This thesis is organized in five chapters. Chapter one introduces the background of 揟he Four Impairment Allowances?which includes allowance for doubtful accounts, inventory obsolescence allowance, short-term investment allowance, long-term investment allowance. Then, explains 揟he Effectiveness Theory of Securities Markets?This chapter also considers the distinction between positive accounting theory and normative accounting theory. Chapter two discusses the general influence after 揟he Four Impairment Allowances Chapter three analyses the earnings management after 揟he Four Impairment Allowance? Basically,the method of earnings management includes Taking a bath, Income Maximization, Income Smoothing, Income Minimization. The company that needs earnings management uses retroactive adjustment changing the book profit. Chapter four aims at the stock price behavior after 揟he Four Impairment Allowances拁. Chapter five comes to the conclusion: 揟he Four Impairment Allowances? makes it easier the Earnings Management of the listed companies. And then gives some points to reduce earnings management using accounting policy.