Case Study On Enterprise's "Composite" Performance Manipulation In The Context Of Equity Pledge

With the continuous development of China's capital market,equity pledge has become a very common way of financing.While widening financing channels for large shareholders with capital needs,it also brings considerable risks:once the stock price falls to close,the pledged equity will face the risk of forced liquidation,and for large shareholders,there is a risk of control transfer.This thesis believes that,in order to avoid the risk of transfer of control rights caused by equity pledges,large shareholders often carry out some operations to enhance public confidence and stabilize stock prices."Compound" performance manipulation is an optional solution,which includes two aspects.on the one hand,companies manipulate earnings through earnings management and whitewash reports to stabilize stock prices;on the other hand,companies use self-interest performance Attribution to cover up the performance changes brought about by earnings management and beautify the corporate image.Generally speaking,private companies with high equity pledge rate,high equity concentration,and weak equity checks and balances are more prone to "compound"performance manipulation due to large shareholder rights and weak supervision.This thesis attempts to take Huayi Brothers' "composite" performance manipulation behavior as an example,analyzes the motivation and feasibility of its "composite"performance manipulation behavior in the context of equity pledge,and analyzes its earnings management methods and self-interest performance attribution.Because of the analysis of the entire process,the results and impact of Huayi Brothers' "composite"performance manipulation under equity pledge were analyzed.Through the research and analysis of the Huayi Brothers case,this article visually shows the "composite"performance manipulation,and makes relevant suggestions to the regulators,the company itself,and investors.I hope that the research in this thesis can improve the relevant parties to a certain extent The understanding of this behavior has brought some inspiration to all parties.