Sale Opportunity Of Available-for-sale Financial Assets And Earnings Management

The profitability of an enterprise is the core content of the company’s financial indicators.It is related to the survival and development of the company.It plays a very important role in evaluating the company’s financial status,initial public offerings,and delisting.This leads to incentives for the company to conduct Earnings management.In recent years,the continuous improvement of China’s accounting standards and related laws and regulations has,to a certain extent,inhibited the behavior of corporate accrued earnings management,which has led to the gradual appreciation of real earnings management by companies.At the same time,with the vigorous development of China’s financial markets,some companies have large profits in holding financial assets.Disposing of available-for-sale financial assets can enable companies to obtain large profits in the short term,which is an efficient and real earnings management behavior.However,the company’s earnings management practices do not substantially improve the company’s operating conditions.This paper analyzes the earnings management activities of Liuzhou Liangmianzhen Co.,Ltd.in the sale of available-for-sale financial assets and considers the accounting performance evaluation model of companys.This article takes the activities of earnings management of Liangmianzhen company from 2009 to 2016 as the research object.First of all,in light of the release of the new China Accounting Standards and the sale of available-for-sale financial assets by the company,the background and significance of this article are discussed.Second,the research literature on earnings management is reviewed,the meaning and estimation model of earnings management are discussed,and the research results are summarized.Third,on the basis of expounding the basic situation of the company and the background of its industry,we analyzed the opportunities and motives of the earnings management activities of the company.And using the Modified Jones Model to measure the accrual earnings management of Liangmianzhen Company.An event research method was used to analyze the market reaction of the sale of available-for-sale financial assets by Liangmianzhen Company.Finally,through the earnings management of Liangmianzhen Company,this paper elicited the thinking of the accounting performance evaluation model,and then conducted a comparative analysis of the accounting performance evaluation model based on the net profit and the accounting performance evaluation model based on the comprehensive income.Through the case analysis of the earnings management activities of Liangmianzhen Company,it was found that the company has not only a certain degree of accrual management,but also manages the real earnings management by selling available-for-sale financial assets each year.Moreover,the use of selling available-for-sale financial assets for earnings management can quickly improve the company’s accounting performance in the short term.However,market investors have already been aware of the earnings management of the company for years.This also shows that China’s practice in the reform of accounting standards requires that the presentation of other comprehensive income and comprehensive income is of great practical significance.