Multiple Case Studies Of Earnings Management Based On Corporate Life Cycle

In the past thirty years,earnings management has become a hot issue in financial management of listed companies,especially in the financial field.It is found that some listed companies would mislead information users by constructing real transactions or taking advantage of accounting policies to manipulate the accounting earnings.Earnings management has distorted the true connotations of accounting earnings.For company investors and creditors,this distorted accounting information will lead social capital to flow into companies of low efficiency.For corporate managers and shareholders,the asymmetry of accounting information will lead to inefficient decision-making or even mistakes in their decisions.As a result,the capital market cannot play a better role in promoting the development of enterprises.Similarly,earnings management run by corporate managers for their own benefits will ultimately damage the interests of shareholders and investors.Therefore,the prevalence of earnings management problems will affect the healthy development of social economy.The motivations of earnings management and the means used by earnings management vary from company to company.Similarly,the earnings management of the same company in different development stages or different life cycles will also be diversified.In view of this,this paper studies the earnings management of manufacturing companies from different life cycles.It is expected that through this research,on the one hand,it will help the financial information users enhance their ability to recognize accounting information and promote the fairness of creditor and equity investment;on the other hand,it can also provide a useful reference for regulators to standardize the earnings management,thereby promoting the healthy and stable development of the capital market.On the basis of summarizing domestic and foreign theories and case studies on earnings management,this paper focuses on China's manufacturing companies,combining their different life cycle and earnings management characteristics,and conducts a comparative analysis.Based on the analysis of Company A,Company B and Company C by using "Total Accruals Model" and "Mean Reversion Accrual Model",the paper draws the following conclusions.(1)Based on the Total Accruals Model and the Mean Reversion Accrual Model,the results show that earnings management is a common practice among the established companies regardless of their life cycle.(2)In the start-up period,the earnings management is mainly motivated by reflecting management ability and the financing need of the company.Public subsidy is adopted as the principal means of earnings management.(3)In the growing and mature period,the motivation of earnings management is to maintain the steady growth of profit.The earnings management is managed mostly by related party transactions.(4)In the recession period,the motivation of earnings management is to avoid the special treatment and delisting by the supervisory authorities.Cost control and public subsidy is the major way to manage the earnings.(5)According to different life cycle,this paper summarizes the general applicable earnings management measures...