Research On The Effect Of Earnings Management On Corporate Value Of Growth-type Enterprise

What difference will the earnings management make in the corporate value of growth-type enterprise? Accounting academics may not have a unified answer.Different scholars can give you different answers.But in Accounting practice,it's quite normal that earnings management exists.Many public companies manage their earnings in China nowadays.What do these executivesmanage their earnings for? And how will they manage the earnings? What effect do earnings managements have on these companies? These are the reasons why I decide to write this article.Because companies in different corporate life cycles are in different operation situations,meanwhile theyalso have different strategic targets,earnings management may have different effect on the companies in different corporate life cycles.According to previous studies,it is more likely that growth-type enterprises go on earnings management and the effect on growth-type enterprises is more notable.So,the research on the effect of earnings management on corporate value of growth-type enterprise has become the topic of this thesis.In this thesis,we will combine case analysis with theoretical analysis.First of all,we will review the research result that scholars have studied.Then we will put out the definition of the earnings management in this article.Earning management means that within the range accounting standards and the relevant laws and regulations allow,enterprise's change the date of financial statement by changing of accounting measurement method or constructing real deal to achieve personal purposes or maximize the enterprise benefit.In the later part of theoretical analysis,the common motivations and methods of earnings management in growth-type enterprise will analyzed briefly.The theory of Jones Model will also be introduced.In the part of case analysis,an Internet video company will be set as the example.Its public financial date from year 2010 to year 2015 will be analyzed to study the earnings management of company A.After introducing the historical evolution and financial conditions of company A,we think company A have the common characteristics of growth-type enterprise,such as scale expansion and business development.Some problems that often happen on growth-type enterprise also appear in company A,such as earnings volatility and pressure from cash flow.After analyzing of profit status,we can find the reason why the profit of company A decrease is that its main business known as selling terminal equipment is in a deficit state.And the profit forecast of Y2016 shows that company A will face the problem of cash flow gap if it doesn't go on financing.In order to reduce its negative effect of profit decrease and keep the investor's enthusiasm,the administrators of company A are highly likely to manage the earnings to increase the profit of the financial report.By adopting Jones Model analyzing the date,we confirm this perspective.Meanwhile,we also analyze the earnings management operation in detail to support this opinion.Analysis of earnings management effect will be shown by financing and operation condition in year 2016.In one hand,that company A go on financing successfully means earnings management can be beneficial to enterprise financing.On the other hand,as the business of company A doesn't take a turn for the better,we can see that earnings management can't bring benefit for a company directly.Through the analysis above,we can draw a conclusion that earnings management,as a method to passing information from administrators to investors,can play a positive role in corporate finance.With earning management,profit expectations of investors can be satisfied.Reputation damaged and share prices fall can be avoided.Earning management can ease the hurt that a company is suffering for the moment.However,earning management can't help to solve the problem that appear in the process of company development.Earnings management can even lead to the business situation take a turn for the worse,if misused.At last,based on the conclusion above suggestions will be put forward for both administrators and investors.