For Listed Companies To Use " Significant Corrections Of Accounting Errors " Analysis Of Earnings Manipulation

The earnings manipulation in the listed company spreads within the scope of world with various skills. Chinese securities market has just been developed for more than twenty-years and listed companies always manage accounting manipulation frequently. The motive that company cheats can't exterminate for various benefits, The more strict the supervision of government is, the more clever the accounting methods of manipulating earnings.This thesis is based on the total analysis of our country listed company the earnings manipulation, concludes the disclosure problems of annual financial reports of Chinese listed companies in recent years, then analyzes the trace of evolution of accounting tools in earnings manipulation. Since the correction of Accounting Errors applies to retrospective adjustment method, it does not affect the profits data of the year and the signal function of accountancy's signs. This paper considered that the method just became the new methods of profits adjustment because of its flexibility. Government was in great need of regulating this situation by announcing many rules.The thesis expands that correction of accounting errors has more advantages, compared with other accounting skills to manipulate earnings, It can apply to more widely applicable domain with the characteristic of large amount of money, quick operation and wide usage. It would not affect the present earnings and the increasing of future earnings following no capital burden. But as the final fake method, it is not only advantageous but also harmful. It means that operators admit their previous mistakes with the responsibility of fake statements. To fake cannot cover the actual problems. Correction of accounting errors just means shifting assets loophole from present financial data to that of prior periods.This paper discusses the weight of profits and losses and the motives when choosing manipulating methods from the change of accounting skills in earning manipulation, motives and effects of faking. It focuses on the process, background, further motives and advantages and disadvantages by the analysis of TCL case in 2003, which revealed its problem of using correction of accounting errors to manipulate profits; and it discloses the characteristics, motives and damage when applying it to manipulate profits. And it also displays the awkward position of the government that it is hard to regulate from the social beneficial aspect of supervising capital market. Based on these content, the thesis puts forward valid suggestions on how to effectively control the listed companies manipulating earning by correction of accounting errors connecting limitation of present supervising rules. To sum up, this paper makes a great contribution to the literature within China for its originality and full and accurate analysis.