Whitewash Profit Motive,the Auditor Oversight And Debt Restructuring-Evidence From Chinese Listed Companies

Our 1998 promulgated the "Enterprise Accounting Standards - Debt restructuring", called for debt restructuring in the event of the debtor’s financial difficulties of the situation as the basis for fair value accounting treatment, resulting in a lot of companies use debt restructuring and profit manipulation. To guard against business profits whitewash, the Ministry of Finance in 2001 on debt restructuring guidelines were revised, using the book value as the basis for the accounting treatment of debt restructuring and debt restructuring would not be recognized. However, after verification of the market, this approach is difficult to prevent the manipulation of corporate profits fundamentally, therefore the Ministry of Finance in 2006 was the second revised guidelines for debt restructuring and re-use of the fair value basis of accounting treatment of debt restructuring. Revision of the new guidelines on the one hand using the "fair value" are measured to solve the problem of false statement of assets and improve the authenticity of the financial statements, on the other hand in dealing with the debt restructuring and losses reflects the principle of consistency. The new guidelines stipulate that the debt restructuring through profit or loss, companies can make up for losses through pre-tax profit and profit after tax to make up for losses, with surplus reserves to cover losses from net income and other ways to achieve the deficit to make up in order to address corporate financial distress.In today’s economy, the ultimate goal of corporate debt restructuring actions are to achieve the financial effect of business you want. This financial effect is achieved through debt restructuring to increase profits and improve the economic efficiency of enterprises and the purpose of its financial difficulties. Financial effects of debt restructuring can achieve through the restructuring of the debtor or to help companies get rid of the debt trap, or directly increase economic benefits.Since 2006, new guidelines for debt restructuring has been implemented for nine years, at this time of Listed Companies profit motive whitewash, auditor oversight and the relationship between debt restructuring has a very important theoretical and practical significance:the party both theoretically rich the debt restructuring, the profit motive and knowledge whitewash earnings management, on the other hand, and from debt restructuring reality demonstrates the adaptability of the new guidelines, to promote the implementation and improvement of standards. Change the debt restructuring of the new guidelines are reasonable and realistic, it will make use of earnings management behavior of listed companies profit whitewash what impact, auditor oversight mechanisms can play a role in suppression, will increase the earnings management space, also how to improve the implementation of the guidelines and other effects, study this series of questions, both from the listed company’s own development, or from the interests of investors, have important significance. This paper studies by listed companies and auditors, the profit motive whitewash mechanism of inhibition of these two different aspects of the use of debt restructuring, resulting in different effects, in order to further improve the sound, debt restructuring guidelines for corporate governance and strengthening auditor oversight provide a theoretical and practical basis, and make constructive comments. Through research on listed companies issue debt restructuring, debt restructuring of listed companies aim to explore and observe the performance of the company before and after the debt restructuring, changes in the degree of manipulation of profits, draw conclusions and enlightenment debt restructuring. This improvement of the development of enterprise accounting standards, improve the management efficiency of enterprises, strengthening auditor oversight, and promote healthy and effective development of the securities market, has very important significance.Debt restructuring of enterprises to use earnings management empirical research paper, empirical research methods, thus proving the case control other factors, the strong profit motive whitewash company, will carry out debt restructuring, debt restructuring and confirm more gains; more stringent supervision of auditors of the company, will be less debt restructuring, debt restructuring and confirm fewer gains. The article is divided into five parts:The first part is an introduction. An overview of the topic of institutional background and significance, and proposed content and structure of the framework of the article, the article points out possible innovations and shortcomings.The second part is a literature review. By reviewing the debt restructuring guidelines, the basic meaning and motivation of earnings management of listed companies use debt restructuring earnings management behavior defined in the relevant literature, research to understand the current situation and development trend.The third part is the hypothesis derived part. In this section, first on the use of debt restructuring earnings management factors were analyzed, including the profit motive and whitewash auditor oversight mechanisms, and earnings management metrics were chosen, and thus make relevant theoretical assumptions.The fourth part is the part of the study design. Including the definition and measurement of profit whitewash, select the sample data, to determine the study variables and build models.The fifth part of the empirical analysis section. Respectively, through descriptive statistics, correlation and regression testing for the proposed research hypotheses were analyzed to verify.