A Case Study On The Delisting Due To ’Par Value’ Of Zhonghong Holding Co.,Ltd From The Perspective Of Earnings Management

With the development of capital market,the degree of earnings management manipulation of listed companies is gradually increasing.Earnings management achieves its own earnings goal by operating,financing and other trading activities.In recent years,excessive earnings management has seriously affected the allocation of resources in the capital market and brought huge losses to investors.The behavior of earnings management manipulation of Listed Companies in China has gradually become a trend of flooding.From the perspective of practical operation,appropriate earnings management can transfer more accounting information to achieve the result of balancing the demands of contract stakeholders.However,excessive earnings management has been reduced to opportunism.Its essence is a kind of financial report manipulation behavior of enterprise management in order to seek their own interests.So,what are the motivations of listed companies’ earnings management? What are the effects of earnings management of listed companies? What is the relationship between the loss degree of listed companies and earnings management? Will the increase of earnings management increase the risk of stock price collapse or delisting?Based on the principal-agent theory,information asymmetry theory,incomplete contract theory and stakeholder theory,this paper selects the first "Par value delisting" Zhonghong Co.,Ltd in domestic capital marketas the case study object,and brings earnings management,corporate governance and delisting risk of listed companies into the same research framework.It uses the combination of theory and case analysis method to explore the use of earnings management Process and adverse consequences of delisting.The main research content of this paper: on the basis of combing the relevant literature of earnings management and its influence,first of all,it expounds the development process,operation status and the consequences of earnings management of Zhonghong Co.,Ltd.Secondly,through the case study,we find the real motivation of listed companies to manipulate earnings management,and analyze the corporate governance,the external environment,information disclosure and the subsequent impact on the delisting mechanism.Finally,the corresponding enlightenment and related research conclusions are drawn.The conclusions of this paper are as follows: first,through the manipulation of earnings management,Zhonghong Co.,Ltd can cover up the serious losses of the company,alleviate the debt risk exposure and reduce the external financing constraints.Second,the unreasonable corporate governance structure leads to the failure of internal supervision,which provides an opportunity for the management to carry out earnings management.Third,the weak supervision of external regulators and stakeholders gives companies more room to manipulate earnings management.Fourth,earnings management behavior has a negative impact on the long-term performance of the company,even leading to the collapse of the company’s stock price,which has become the driving force for the company to withdraw from the A-share market.To sum up,it is of theoretical and practical significance to select this case,which will help the stakeholders of listed companies to view the financial reports disclosed by enterprises in a rational perspective under the background of information asymmetry,play a warning role for other listed companies in the capital market,and in the long run,make the listed companies and their investors get the best protection.