The Effect Of Negative Goodwill To Earnings Quality Based On The New Enterprise Accounting Standards

With the development of economy, our country also entered the era of mergers and acquisitions. In the enterprise mergers and acquisitions, the negative goodwill will be directly included in the current profits and losses one-time, based on the new enterprise accounting standards. In this case, the negative goodwill can improve the company’s profit, and negative goodwill also become a kind of means of earnings management. So, the negative goodwill to the influence of the earnings quality are particularly important.So the main purpose of this paper is to study the effect of negative goodwill to earnings quality. First, we introduced the related concept of negative goodwill. And then, through the literature review, this paper reviews several main points of view of the domestic and overseas about the negative goodwill’s cognizance, accounting methods, properties. And through the review we found that the field of research in our country on the influence about negative goodwill to the earnings quality is blank, and it is also further consolidate the significance of this paper. Next, this paper designs a series of research model, with the2007to2010A shares of the listed company as the foundation, to determine the effect of negative goodwill to earnings quality. According to the regression results, this paper-puts forward the research conclusions, and based on the actual situation of our country, some suggestions were put forward.In this paper, the valuation model and return model will be used to test the effect of negative goodwill to earnings quality. Through the research we found that:(1) the net assets and the residual income after deduction of negative goodwill have a significant positive correlation to stock price.(2) unexpected earnings after deduction of negative goodwill has a significant positive correlation to abnormal return.(3) the negative goodwill has a negative relationship between share prices.(4) negative goodwill has a negative relationship between abnormal return.(5) negative goodwill had no significant surplus reaction, that is to say that investors could tell the negative goodwill of earnings management characteristics. Due to the negative goodwill can not only bring the increase of the profit, but also to mislead investors, make investors do the wrong judgment about company management. In this kind of mistake of judgment, the capital market will go to bad. So for this, our country should improve the fair value evaluation system, improve the comprehensive quality of accounting personnel, strengthen the disclosure of the negative goodwill degree, improve negative goodwill accounting system at the same time the market investors also should pay attention to the listed companies’ earnings structure, to ensure the healthy operation of capital market.