Research On Enterprise Earnings Management Behavior Under The Background Of National Control Policy

Rare earth industry is an emerging industry with an important strategic position in China,and plays an important role in China's economic and social development.However,a series of problems have arisen in the development of rare earth industry,including prominent structural contradictions,overcapacity of primary products,repeated illegal mining,insufficient capacity for independent innovation,and serious environmental damage.Therefore,the state has issued a series of rare earth industry policies to guide the rare earth industry to normative,healthy and sustainable development.These policies have a great impact on the profits of rare earth enterprises through different ways such as price and cost.Under the influence of the state control policy,rare earth enterprises,motivated by political cost,will conduct different earnings management actions in different years according to the actual situation of the industry and enterprises.Therefore,this paper explores the earnings management behavior of rare earth companies under the background of national control policy,and analyses the role and influence of political cost on earnings management behavior.The results show that the listed companies of rare earth industry will implement earnings management in different directions in different periods of policy promulgation due to the motivation of political cost,and adopt two different methods:accrued earnings management and real earnings management.Specifically,at the time of unfavorable industry regulation policies,listed companies in rare earth industry will choose to reduce accounting earnings to avoid political costs,and the higher the degree of policy regulation,the higher the degree of negative earnings management;while in a series of favorable industry policies,the political costs of enterprises will be reduced,in order to show the good effect of policy implementation and promote the introduction of more favorable policies,enterprises will use positive earnings management to improve profits and business conditions.This paper uses the method of theoretical research with case analysis.Firstly,it introduces the relevant theories and literature review of earnings management,and makes a theoretical analysis of the impact of national control policies on earnings management of enterprises.Then it combs the content and changes of rare earth industry policy,chooses appropriate accrued earnings management model and real earnings management model to measure the degree of earnings management in rare earth industry,and analyses the impact of changes in rare earth state control policies on earnings management of companies in rare earth industry.This paper takes China Northern Rare Earth Company as an example to analyze its earnings management motivation under the influence of favorable and unfavorable policies.At the same time,this paper emphatically analyses the different means of earnings management adopted by it from two aspects of accrued earnings management and real earnings management.In response to the unfavorable restriction policy of rare earth industry,its main methods are to increase bad debt preparation and inventory depreciation preparation,increase depreciation amount of fixed assets and use deferred income tax to reduce profits;while in the favorable supporting policy,it used to increase credit sales income,increase production and increase business income of rare earth trade to improve profits.Finally,through a series of analysis of earnings management behavior,this paper puts forward some suggestions to deal with earnings management behavior of companies under the motivation of political cost,such as considering earnings management behavior of enterprises,strengthening internal control of enterprises,strengthening information disclosure and improving the effectiveness of audit supervision.