Study On Earning Management In Related Party Of Listed Company

The earliest asset reorganization in our country traced back to 1990 s. After that, the earnings management problems of connected transactions in public company deteriorated rapidly in a chain way. In a company, the connected transaction refers to the transformation of the commitment, resource and labor of the related parties. It is neutral that does not violate the related law in our country. However, as the economy develops rapidly in our country, the intensified market competition and the obvious enterprise collectivization makes the exchange of interests among enterprise no longer open and concise. Initially, the connected transaction is the best approach to evade tax legally and reduce operating cost for a company. But nowadays, the companies are using it to control profits and cover the financial report as well as the barely satisfactory earnings management so that to maintain its position in the capital market. Earnings management is a common way to supervise the connected transaction in public companies of stock market in our country. Fundamentally, earnings management is the method to adjust profits which is allowed by law, but it is actually playing the law. Most of the public companies in our country are listed with the help of divestment. They are in a complicated relationship with the later parent company. One typical example is the Northeast Pharmaceutical Company. As a pharmaceutical enterprise, it involves many affiliated enterprises. That is why we studied this company about the earnings management of connected transactions in this paper. By means of standard definition, system analysis and theory-practice combination, this paper studies the earnings management issues in connected transactions in public company. Firstly, based on the related theories of connected transaction, it promotes the development strategy to continuously expand the actual arrange of connected transition. Then, with these theories basis, it explains specifically the definition and features of the earnings management of connected transaction and analyzes the purpose, as well as the detailed ways of the earnings management of connected transaction in public company. Next, by analyzing the annual report data of Northeast Pharmaceutical Company from 2009 to 2011, the author further analyzes the earnings management issues of the connected transaction in this company, thus proposes the solutions specific to these problems. Finally, it explores the strategies to standard the earnings management of connected transaction in public company based on case study. Limited by the theoretical and practical ability, the author may not fully consider the multiple contradictory subjects and other elements involved in the case study of earnings management in connected transaction. Thus, the analysis may not be profound enough. It is necessary to deepen and broaden the study of earnings management of connected transaction by combining the related knowledge with practical experience in the future learning and practice...