Research On Earnings Management Behavior And Its Impact On Performance Of ST Enterprises

ST system is a special system in China,which gives inferior listed companies a period of "delisting rectification period".When the financial performance of loss-making enterprises improves,they can "take off their hats" and resume normal operation.ST companies usually aim at turning losses into profits.They exhaust all kinds of resources to avoid the risk of suspension of listing caused by continuous losses.they achieve their ultimate goal through earnings management.Obviously,this will affect the quality of accounting information,disrupt the normal operation order of the market and damage the interest of stakeholders.Based on the analysis of the background of ST system in China,this paper discusses the path of earnings management according to the relationship between financial statements,and analyses the financial consequences.This paper chooses Anshan Iron and Steel Company,which implemented ST in 2013,as the research object.The earnings management methods adopted by the company includes changes in accounting estimates,asset replacement,equity transfer,government subsidies,deferred income tax,etc.What's more,The financial index analysis method and event study method are used to evaluate the financial performance and market performance of the company.The research finds that the ST system is an important factor for these companies to choose earnings management.The "delisting" system of capital market affects the means of earnings management of ST companies.Earnings management has different effects on long-term and short-term performance of enterprises.ST companies should correctly understand the limited role of earnings management and avoid the adverse economic consequences of excessive earnings management.Only by improving the internal operation and management of enterprises can the financial performance of enterprises be effectively improved.Finally,on the basis of case study,this paper puts forward Countermeasures of earnings management of ST companies from two aspects of delisting system and supervision.