Research On Earnings Management Behavior Under Pledge Of Major Shareholders' Equity

As a new type of financing method,equity pledge rose in China in the 20th century.In 2007,only 50 enterprises in China tried this kind of financing method,and gradually realized its characteristics such as easy to realize and operate.Nearly 2000 enterprises carry out equity pledge to obtain financing in 2017.Although it is gradually favored by the shareholders of companies,but there is no denying that there are certain risks in equity pledge.After the equity pledge,if the stock price falls sharply,it is likely to cause the company to fall into the crisis of control transfer and financial distress,then the major shareholder is very likely to carry out earnings management to safeguard the interests.This approach will inevitably affect external investors in the market,causing certain damage to its interests.Therefore,it is of theoretical and practical significance to study the earnings management under the pledge of major shareholders' equity.This paper adopts the case study method and the quantitative analysis method,taking the theory of control rights,principal-agent theory,information asymmetry theory as the theoretical basis.This paper takes Shenzhen Coship Electronics Co.,Ltd as the research object of this paper,and makes a detailed analysis and evaluation of its earnings management behavior and consequences under equity pledge.Finally,it puts forward some practical suggestions for the internal and external aspects of the enterprise..The study found that the major shareholders of Shenzhen Coship Electronics Co.,Ltd frequently pledges equity in 2013-2015 for the company's supplementary funds and personal interest motive.After identifying the earnings management through the model and analyzing its annual report,it believes that there are accrued earnings management methods such as controlling operating costs,using asset impairment losses and bad debts preparations,as well as real earnings management methods such as reducing period expenses,transferring subsidiaries' equity,and using government subsidies.After that,the market value and financial performance of earnings management are analyzed and evaluated,which believed that it caused certain negative effects.Finally,according to the earnings management behavior under the pledge of major shareholders' equity,suggestions are put forward from the perspective of internal and external enterprises.