Research About Listed Company Use Earning Management To Get Rid Of Special Treatment

With the reform and opening up, China’s economic construction grew by leaps and bounds, but the rapid economic development also acted as a double edged sword, on the one hand, this accelerate the pace of China’s economic progress, meanwhile, excessive development speed caused the lagging of the establishment of rules and regulations, and the following various loopholes and shortcomings.And all of the loopholes and shortcomings was exploited by many organizations and individuals to seek their own interests, and ultimately may even jeopardize the country’s overall economic health.China’s securities market specific ST system (Special treatment), namely to warm the risks of the operating and financial condition of some companies, for the suited companies named with the suffixST, while The rise and decline will be limited to5%per day of the ST stock. The distinctionbetween these companies and the normal listed companies can be made in this way and the current operating conditions of the listed company can be revealed to the investors. Remind certain risks of this kind of companies for the investors.For financing motive, market protecting motive, as well as politically motivated, ST companies are eager to cancel the ST suffix in order to revoke other risk warning. In order to succeed in cancellation of ST,many companies must meet the requirements of the Listing Rules, but in practice, for a variety of reasons, most of ST companies do not raise revenues through, reduce operating costs and other legitimate ways to achieve profitability, but is relying on excessive earnings management means to manipulate profits, in order to achieve the cancellation of ST.Undoubtedly, this act of the ST companies will cause the serious distortion of accounting information of the external market, making investors lose confidence in investment, leading to market freeze, and ultimately harmful to the country’s economic development. Based on the success of cancellation of ST of ST Meiyan, a detailed analysis of the background, motivation and method of the cancellation of ST Meiyan, and Supplemented with brief analysis of cases during the same period, exposing the part of the ST listed company does not improve operating conditions to achieve profits; In contrast, after the2012revised edition of "Shanghai Stock Exchange Listing Rules ",due to the restrictions on the cancellation of ST was loosened up, the condition" after deducting non-recurring gains and losses attributable to the listed company’s net profit is positive " was deleted, a large number of ST companies have canceled ST successfully, and the manipulations highly uniformity,most of these cases choose to use non-recurring gain adjustment total profit, legally unreasonable for such earnings management behavior.One purpose of this creation is, to reveal the ST companies have misled the investor through earning management,and caused loss of the investors.Secondly,to analyze the changes of earning management after<RulesGoverningtheListing of Stocks on Shanghai Stock Exchange revised edition published. The third is to arouse the attention of the relevant departments, improve relevant rulesand regulations, strengthen the ST Company’s financial regulation,speedup the establishment of China’s Securities trading market.This paper firstly elaborate the theory, then added some case study. Aiming at the phenomenon that dozens of ST companies using earning management to achieve the cancellation of ST, this paper analyzed the motivation,methods theoretically first, and the with the case study of ST Meiyan, to prove some of the ST companies do use this way to achieve the cancellation of ST.On the basis of the existing ST companies’ earnings management and case studies, this paper confirmed the ST companies do use earnings management to achieve the cancellation of ST. The main contribution of this paper is to provide a specific case study, meanwhile discuss the effect for earning management of the ST companies after new policy on the ST stock market was published. Finally provide some suggestion for the revise of accounting standards, market supervision, accounting firms.