The Research On Earnings Manipulation Before The Insurance Of ST Chaori Bond

Over the past three decade, there is a significant part among the financing market of China, it is the debt financing. Chinese companies have always depended on the loan of bank, in spite of indirect financing; while in the part of direct financing, regardless of the absolute scale or the relative proportion in social financing, the bond has been taken over the market of stock since the year of2008. As debt financing acquirement, debt contract signing, debt pricing and bonds credit rating would all have to rely on the financial accounting information provided by the company and the earnings ability reported by the company, company’s debt financing are necessarily connected to earnings manipulation. This paper analysis earnings manipulation before bond issued, and with the real examples we explore the methods of earnings management before bond issued form medium, consequence, and causation. This provides a theoretical basis for earnings manipulation.Based on earnings manipulation, we research the theories of earning manipulation, and take the ST Chaori as an example and analysis earnings manipulation. First, generally introducing some information about ST Chaori bond, including the Chaori cooperation, the condition of photovoltaic and the brief introduction of ST Chaori bond. Second, outline the motivation of earnings manipulation based on the first part, we introduce the asymmetric information theoiy, principal-agent theory, contract theory. Thirdly, based on the example of ST Chaori, we analysis the methods and the consequence. Analysis of the causes from four angles within the company, credit rating, policy and regulatory policy on ST Chaori bond issuance, finally in order to prevent the earnings manipulation caused bond defaults on the occurrence of issuers, bond holders, potential investors, credit rating agencies and regulators put forward relevant proposals. This will help promote the importance of earnings manipulation before bond issued. It has a certain guiding significance for not only the corporation but also the holders of bond.