A Study On The Correlation Between Real Earnings Management And Long-Term Performance Of Chinese Listed Companies Based On Delisting System

China's capital market is in the "transition" stage and Delisting system has its distinct characteristics."Risk Warning" system is one of them.According to Shanghai Stock Exchange Listing Rules and Shenzhen Stock Exchange Stock Listing Rules,"Risk Warning" refers to a state when the enterprises had been ST or *ST.The purpose of "Risk Warning" system is to remind investors to concern about the adverse situations of enterprises,while warn "risk warning" companies to improve management and optimize the allocation of resources.Once the enterprises touch the red line to a certain extent(such as time limit),they will be directly delisted.Due to the importance and scarcity of "avoid delisting" in China's capital market and the "delimitation period"(risk warning period)for enterprises to touch the red line for the first time,the enterprise has sufficient motivation and ability to make earnings management during the "Risk Warning" period to achieve the purpose of maintaining the status of listing.While the emergence and revision of the regulatory system often lead to a shift in the way of earnings management(Cohen,2008;Li Zengfu,2011).In October 2014,the China Securities Regulatory Commission(CSRC)issued the Opinions on Reforming and Strictly Implementing the Delisting System of Listed Companies(No 107),which embodies the trend of strict delisting regulation in China(Fang Zhong et al.,2016)and squeezes the space of accrual earning management.No 107 will leads the enterprises to adopt real earnings management(REM)to realize the current profitability.Since Schipper(1989)put forward the theory of the REM,there have been lots of researches on the REM.Especially in recent years,the REM has become the focus in both academic and practical fields.In fact,the research on the REM in China mainly focuses on the motivations(IPO,SEO,tax avoidance),the transformation of the mode and the effect(short-term impact).The research framework of the REM is basically formed,but still need to expand.Therefore,the research on the REM in the purpose of avoiding being delisted is a vital component in both the field of real earnings management and the delisting system in China.Based on the special delisting system in China,this dissertation discusses the relationship between the real earnings management and its consequences.The dissertation is divided into seven parts: the introduction,literature review,institutional background,theoretical analysis and research hypothesis,empirical research design,research test and result analysis,conclusion and suggestion.The first chapter is introduction.The second chapter summarizes the existing literatures from two aspects: the concept of the REM and the impact on long-term performance.The third chapter reviews the historical evolution of China's delisting system,and expounds the phenomenon of "retreating" under the system of "risk warning",which paves the way for the post-study hypothesis.Chapter four makes the following two possible hypotheses:(1)the degree of real earnings management is positively related to the likelihood of “risk warning” begin;(2)The higher the degree of real risk management,the worse the long-term performance of the "risk warning" enterprises.In the fifth chapter,we choose the A-share listed companies in the "risk warning" state during the period from 2009 to 2012 as the samples,and construct the LOGIT model and the multiple linear regression model to test hypotheses.The sixth chapter analyzes the results of empirical research.The chapter seven is conclusion and suggestion.This dissertation enriches the research content of the theory on real earnings management,completes the research frame of "motivation-way-consequence",which is a useful supplement to the existing literature;At the same time,it creatively constructs a new index-"Risk Warning" to study the economic consequences of the real earnings management In addition;It is of great significance to the operation,investment and financing decision-making of CEOs,and the recognition of real earnings management for investors in capital market as well as the perfection of regulatory system and capital market construction.