Empirical Research On The Listed Company’s Earnings Management In China By Making Use Of Assets Impairment

Earnings management is an important field rising in the accounting research inAmerica in the1970s, has been almost40years history. With the research in foreigncountry change from theory to empirical study, it has made notable achievement. In recentyears, with the market economy and capital market steadily improving, accounting earningsinformation has become a very important influencing factor of corporate value. The issuesof listed company’s earnings management are becoming increasingly exposed. Thisphenomenon has received great interests of the academics and become an important field ofChina’s modern financial accounting research.Asset depreciation reserves have become a very important tool for the companymanagement’s surplus reconcilement, because the flexibility and ambiguity of the assetsimpairment’s drawing and recovery can meet the motivation of different kind of company’searnings management.The8thnorms of business accounting-assets impairment issued by the MinistryFinance have made great adjustment of the assets impairment policy. It says the loss of thelong term assets impairment can not be recovered, for the purpose to inhibit the listedcompany to manipulate the profit of earnings management by drawing and recovering theassets impairment. However, the market environment is changing all the time and thespecific situation a company faces is complex and diverse, how can the current norms ofasset impairment truly inhibit the earnings management? And will it lead to a new earningsmanagement behavior by the way of inhibit one earnings management? The dent effect ofthe new norm for listed company’s earnings management needs a further theoreticaldemonstration and a fact examination. In this paper, I will validate it by the combination oftheoretical analysis and empirical research and provide a reference for the development andimprovement of the accounting’s assets impairment.In this thesis, based on the mutual relationship theory between assets impairment andearnings management, with the data sample from443Shanghai manufactures’ A sharecompany in3years and the revised Jones Model to measure the earnings level, to build thenet incident’s linear regression model of the earnings level and assets impairment. TheStudy reveals: The enforcement of the assets impairment norm can inhibit the behavior of the listed company’s behavior to manage the earnings with asset depreciation reserves inlong term. However, the corporate does not loss the space completely for earningsmanagement by making use of the short term asset program’s recovery. In the end, I havecome up with the specific problems during the process of the current asset impairmentnorm’s implementation and the possible potential space for earnings management. Thus Ihave raised some corresponding suggestions as to improve the accounting norm andregulatory system, optimize the price market, strengthen the external supervising andinternal control system, and improve the accountant’s overall quality in the hope ofproviding some beneficial reference for the relevant policy making-actors and theoryresearchers.