Research On Political Relation, Debt Restructuring And Earnings Management

At present, allowing for our country is at the period of economic transition, the related system of legal and financial is still not perfect. The allocation of macro resource is still not handled by market but the government. So, there is no doubt that, the political relation of enterprises is a really valuable resource. The political relation may bring an important influence on business decision-making by a variety of levels and various aspects. For their own needs about survival and development, more and more enterprises have began to seek and establish political connections and have taken it into their operation strategy system so that they can enjoy the benefits of preferential policies, improve their operational efficiency, and enhance the value of corporation. Recently, with the dramatically rising wave of the political relation’s researching in the academia all over the whole world, many scholars in China and abroad have found that political-related companies can easily access to financing resources and other convenience and benefits, such as a longer loan period and more preferential lending rates, in the process of debt financing compared non political-related enterprises in the researching about how the political relation can affect business activities. Meanwhile, the political-related enterprises can easily obtain the benefits from debt relief when facing the financial crisis. In addition, political-related enterprises can also easily have the interests from various aspects such as tax relief, financial subsidies, the state-owned bank credit and other resources from the government rescue. It can be seen that a variety of benefits will greatly enhance the political-related company’s implementation of debt restructuring. Additionally, in order to achieve the conditions of profitability and secondary public offering and so on, more and more poorly-performed listed companies begin to manipulate the accounting information and manage the earnings by the loopholes of the criteria about debt restructuring resulted by the constantly revising about the debt restructuring standards in recent years. In this regard, some scholars have found that the government tends to actively support the earnings management of listed companies. That is to say, the government will help the local enterprises to reach the qualifications of listing and allotment and additional conditions to achieve for the ambitions of the economic resources. According to phenomenon nowadays, this thesis attempts to build the logical framework which combining the political relation, debt restructuring and earnings management so that we can deeply research the impact of each other. We hope to enrich and expand the existing research results about related area. We also hope to provide strong guidance and sufficient basis that can we safeguard the healthy and stable operation of socialism market-economy system and the interests of investors for reality.So the content of this thesis is divided into the following five parts. The first part is the introduction of research background, research significance, the research content and the research method of this thesis. The second part is the review and summary of previous domestic and foreign research literatures. In the third part the thesis will put forward the research hypothesis based on theoretical analysis. The fourth part includes the design and analysis of empirical research. The fifth part is the last part of this thesis. In this part, the thesis will summarize the conclusions of empirical research, give some advices based on the empirical research and describes the shortcomings of research.This thesis, not only the perspective but also the method, are all innovative to a certain extent. Something innovative is embodied in detail as follows:Firstly, the current research of political relation is mainly focused on the effects on enterprise performance, diversification, and subsidy of government, financing preference and tax incentives and other aspects. However, the research about the impact gave by political relation to debt restructuring and earnings management is very few. And for a long time, the academic research of corporate debt restructuring and earnings management also base on the perspective of accounting standards, company governance and corporate accounting policy. Nonetheless the related research concerning political relation factors is really rare. For this purpose, this thesis hope to construct a logical framework combining political relation, debt restructuring and earnings management to explore the relationship between the three factors. That is a major innovation of this thesis.Secondly, the previous scholars always divide companies based on their property, such as state-owned enterprises or private enterprises and so on. However, the thesis will not distinguish companies by property. That is another major innovation in this paper.Thirdly, among the previous literature, the measure of debt restructuring always based on the perspective of maxim. But in this thesis, what we will discuss is whether a company emerge debt restructuring not the standards.This is also the innovation of our research.Fourthly, the previous literatures usually use the gain of debt restructuring as the indicators to measure the degree of debt restructuring. However, this thesis selected a new indicator to measure the degree of debt restructuring:the frequency of debt restructuring. That is also a major innovation of this paper.