An Empirical Study Of Listed Companies' Earning Management With Asset Impairment

Before the new enterprise accounting standards was issued, many public campanies have uesd the accounting policy of asset impairment for earnings management. For the phenomenon,the ministry of finance in china issued new enterprise accounting standards, the 8'th asset impairment standards have made a lot of improvements. This standard requires that any recognized impairment losses can not be reversed. But which asset the public companies were inclined to use to manage the earnings? Did it reduce the wide spread earnings management? Will it improve the quality of accounting information? From now on, which improvements should we do for our accounting standards? These questions become the hot points in our accounting circle,and they are the motivations of this paper.This research distinguish the assets impairment of current-asset impairment and non-current asset impairment,and use the statistical analysis methods to study the earnings management with asset impairment theoretically and practically. Focusing on discussing the inclination of using the specific asset impairment when the company want to manage the earnings, and studying the possibility of earning management before and after the new accounting standards.This reseach is divided into six parts:the first part is the introduction of the significance,purpose and framework of this paper. The second part is the literature review of research discoveries of both foreign and china scholars on earning management with asset impairment,and make the brief comments myself. The third part is the study of the asset impairment of old accounting standards,focusing on discussing the possibility for the use of old accounting standards. The forth part is about the new asset impairment policy,focusing on the inhibition of earnings management theoretically,and the defect of the new asset impairment in theory. The fifth part is the empirical research of the inclination of using the specific asset impairment when the company want to manage the earnings, and the possibility of earning management before and after the new accounting standards.The innovation of this paper is the distinction between the impairment for the current asset and non-current asset.and use the specific accrual models to judge the earnings management both before and after the new accounting standards. At the same time.this paper study the inclination of the public companies use the assets impairment.Research conclusion:1.the inclination of the public companies use the assets impairment is:provision for bad debts, inventories impairment, fixed assets impairment.2. before the implementation of the new accounting standards, companies mainly use the non-current asset impairment for earnings management.3. after the implementation of the new accounting standards, companies mainly use the current asset impairment for earnings management.The main stortage:1.It is subjective to use manufacturing companies which represent the whole listed companies,2.It is subjective to use the year of 2006 and 2008,which represent the situation before and after the implementation of new accounting standards.3.Because of the effect of financial crisis, there are some specificities of the data of 2008.