A Study Of Earnings Management By Using The Investment Income

With the development of financial market,external investment has become a general behavior in the companies in order to revitalize the stock funds.Combined with the downward of real economy and the transformation of external environment of economic structure,external investment become some of main important sources of gaining profit and sustaining growth except the main business of the enterprise.Investment income is the result of enterprise's external investment,have an important influence on corporations' profits,which have great influence on company valuation and share price.But due to the definition of investment income source and information disclosure standards are not clear,the listed company in order to achieve a certain purpose or meet certain regulatory standards,creating trade by personal or using the space of judgment given by the accounting standards,what's more,they use investment income for earnings management,which cause investors cannot to understand the real earnings of the company effectively.In this paper,by analyzing the accounting standards related to investment income,combined with the data analysis of return on investment of listed companies in the Shanghai market,draw the conclusion: in recent years,investment income ratio of net income has become more and more big,and investment income has become more and more important.However,at the same time there are some problems.The proportion of investment gains is particular large in the industries which are downing or have a tiny profit or are defective.These enterprises in order to increase profits or avoid losses in a row,will be confirmed through the disposal of equity or use the equity method under the equity investment income and the change of accounting method of investment to obtain large amounts of revaluation gains and income,increase the profit of enterprise,achieve the goal of earnings management.In order to further the research structure,this article select a typical case for analysis based on the investment earnings management.Through the study of this paper,in order to put forward related suggestions about the external investment behavior and investment of listed companies information disclosure regulation under the background of the real economy downward and economic institutional transformation.At the same time,it can help the listed company stakeholders to have a better understanding of financial position and operating results of an enterprise,making the right investment decisions.