Research On Earnings Management Behavior In ST Company Asset Restructuring

Earnings management has become the main methods that the public companies use to manipulate profits and polish financial statements.This is also an effective way for the management to cope with the regulatory authorities,meet the requirement of supervision,and retain the financing advantages.Currently,in China,the research on the ST Corp.earnings management is focusing on the accrual earnings management.However,as the pressure on the “security shell” keeps increasing,this method cannot satisfy the corporations’ requirement any more.At the same time,as the relevant regulations are more and more completed,the space to develop is also shrinking with regard to this method,and the confronting legal risks are escalating.As a result,management will turn its focus to the real earnings management approaches,like the reorganization,etc.to turn losses into gains.But,on the other hand,the accounting standards and capital markets for the reorganization are still insufficient.As a result,the abuse of this kind of approach is going to jeopardize the stable development of the security market.Therefore,at the present stage,the research has a very profound theoretical and practical meaning,which focuses on the reorganization to manage earnings.In this context,first,this paper summarized the domestic and foreign literatures that related to the behavior of ST Corp.reorganization,and confirms that universality and dependent interaction of the reorganization within the ST Corp.Then,this paper summarized the basic theory of the earnings management and reorganization,and introduced the definition of ST system.Next,this paper emphatically analyzed the status quo and the reasons of the ST Corp.using the reorganization to manage earnings.Through the introduction of the case of ST Hailong,this paper analyzed and concluded the specific motivation,methods,and results,which ST Corp.used reorganization to “uncap”.Last but not least,this paper came up with the relevant strategy to govern the abuse of the reorganization.