Research On Earnings Management Under The Special Treatment

In recent years, China's economy is undergoing a stage of slow growth, while the steel industry is facing the crises and challenges. In such situation, the listed company AnSteel with two consecutive years of losses has been ST. Thus, AnSteel did his best to turn round his performance. ST system with Chinese characteristics aims at maintaining the stable development of securities market and prompting the risks for investors. However, the policy has spawned new problems.In order to avoid being delisted, ST companies will rush to take off the sign, which is seen as a hat. If the enterprises want to revoke the risk warning, they should meet the listing requirements. In practice, most of the companies do not raise their revenues through the ways like improving operating income or reducing operating expenses, but is relying on excessive earnings management to manipulate profits, so as to achieve the purpose to get the ST off. There is no doubt that such behaviors will lead to distortion of accounting information and hurt the interests of investors.By examining the four earnings management measures of ~*ST AnSteel, this paper compares the difference on the net profits between run and not run, aiming to explore how the earnings management measures will enable the company to obviate the mark of ~*ST. Additionally, this paper employs a statistical analysis and calculation of CAR. By dint of the analysis above, conclusions of this paper are drawn as follows:(1) ST businesses pursue aggressive earnings management to get rid of the mark of ST;(2) Earnings management will impacts the reliability of information in accounting statements;(3) The market is able to see through earnings management of enterprises. This paper is intended to arouse the attention of stock market regulators, improve relevant capital market regulatory system, protect the interests of investors, accelerate harmonious development and construction of China's securities market.