The Impact Of Earnings Management On Performance Of Listed Companies Under Special Treatment

Earnings management of listed companies is a key research field in the modern financial accounting study. Because of the special system of the stock market in our country, the behavior of the earnings management of listed companies attracts more and more attention. The unique design of the China’s capital market system makes the "Shell" resource of the listed companies precious. With the development of our capital market, China had carried out special treatment system (short for ST system) for stock exchange of listed companies in 1998 and *ST system in 2003.The system defined that the listed company who had losses for two years would face the risk of delisting and even suspension of listing. As a result, facing the great stress of holding the "Shell" resource, the listed companies will produce strong incentives to earnings management in the condition of continuous deterioration for the financial status that has no possible to improve in the short term.At present, the main research direction on earnings management is based on the accrual manipulation. It means the corporation managers could implement earnings management of accrual manipulation by using current accounting system and standards It may help them achieve the purpose of improving performance and avoiding being special treatment and even delisted. However, with the continuous improvement of the securities regulation and elastic reduction of accounting standards, earnings management of accrual manipulation can’t meet the need of expected surplus for these ST listed companies. As a result, they have to search a new kind of earnings management with stronger concealment and lower risk by real manipulation featuring in manipulating real trading activities.The paper takes the listed companies that have been special treatment during the pirod of 2007 to 2011 as research object, using the appropriate model to measure the degree of earnings management. It describes comprehensively the effect on the status of ST listed companies by using different kinds of earnings management. The research results have indicated:(1) The improvement of situation of the ST listed companies is related to their behavior of the earnings management. (2) The ST listed companies implement the accrual manipulation and real manipulation at the same time in order to improve the situation. (3) The ST listed companies are inclined to implementing real manipulation with stronger concealment and lower risk.