Earnings Management Methods Of ST Shanshui And The Impact

Compared with private companies,public companies have advantages,therefore the status of being public is a kind of precious ‘shell' resource in China.ST companies are characterised with continuous losses or other abnormalities,and to avoid being cleared out,ST companies always take measures to improve the statements and the profit performance.However,losses are not caused suddenly,and it is not easy for the companies to improve their actual businesses.It is quite hard to avoid the destiny of delisting through regularly operational means in a short time,thus many companies would resort to earnings management to achieve the goal of turning profitable.This paper is divided into five parts.Part one is the introduction,which introduces the issues to be studied,the theoretical significance and practical significance of the study,and the relevant research background,and explains the ideas of the study,the methods of the study,and points of innovation.Part two mainly gives brief introduction to relevant notions and in this part the development and content of ST rules,and the possible earnings management methods that a company may take are briefly introduced.Part three is case study.In the part,a brief background introduction to ST Shanhui,the object of the study,is given,organized summary is given on the development of ST Shanshui in a chronological order,it is found that the company experienced multiple losses and profits in its 15 years of being public,and the earnings management measures taken to turn profitable are systematically studied.Part four is case analysis,which gives analysis and evaluation of the short-term and long-term impact of the earnings management measures taken by the company during the years of being public.Suggestions are given in Part five to address the possible impact of earnings management of the company,and also the suggestions on the future development of the company are given.Using the approach of case study and having taken the developmental course of ST Shanshui into consideration,the paper analyzes the earnings management methods to turn the company profitable on the appearance.Whether or not the company's actual operating performance has been improved is known by further analysis.The financial performance of ST Shanshui is stated according relevant theories,the short-term and long-term impact of the earnings management methods on the company is analyzed,and suggestions are put forward for the future development of ST Shanshui.The following conclusions are obtained: firstly,the primary aim of a company's conducting of earnings management with non-recurring gains and losses is to turn profitable and avoid the situation of being delisted due to three years of consecutive losses;secondly,conducting earnings management on non-recurring gains and losses greatly improve a company's profit performance on that year quickly to achieve the goal of being profitable;thirdly,from the angle of a company's long-term development,ST companies' using of non-recurring gains and losses to conduct earnings management hoping not to be delisted could not solve the company's development problem fundamentally.