Research On The Transformation Of The Accounting Method Of Equity Investment Of Listed Companies

Since 2007,Y Company has implemented a diversified strategy of joint development of branded apparel,real estate and financial investment,and holded a large number of listed company stocks as equity investments.In recent years,Y company's equity investment income has become a large proportion of its operating profit,and its previous management of equity investment has been widely perceived as having earnings management.At the end of 2017,Y Company extracted 3.3 billion assets from its holdings of Z shares,and then changed the accounting method of equity investments,converting from available-for-sale financial assets into long-term equity investments,which caused concerns from market and regulatory agencies.Later Y company canceled the change.This point coincides with the reform of the Financial Instruments Standards.In 2017,Ministry of Finance issued new financial instrument standards,including CAS No.22,CAS No.23 and CAS No.24.This thesis analyzes the compliance of this event through the internal logic of the case itself and financial instrument standards,discusses the differences between the new and old financial instruments,and analyzes the impact that the implementation of the new financial instrument standards may have on Y.In order to make the accounting information users have a more accurate,comprehensive and complete cognition of this event,it has certain reference value for the management of listed companies' equity investment.This thesis adopts the combination of case analysis method and theoretical analysis method,and it bases on the new and old financial instrument accounting codes and long-term equity investment accounting codes.This thesis can be divided into five parts:the first part is the introduction.It mainly introduces the background and significance of the research and summarizes the viewpoints of domestic and foreign references according to the research direction,then briefly introduces the research methods and research ideas of this thesis,and finally points out the innovation of this thesis.The second part is the relevant accounting codes and theoretical basis.The contents of the new and old financial instruments accounting codes and the long-term equity investment accounting codes are listed in detail.Next,four scenarios of transformation among equity investment are introduced,and the impact of the implementation of the new financial instrument accounting codes on the transformation of equity investments is analyzed.Then the concept of earnings management theory is introduced,including the concept definition,feature summary,and motivation analysis.The third part introduces the case of the paper.This part mainly introduces the background.First,the thesis introduces the basic situation of Y company,including business conditions and financial status.Secondly,it analyzes the impact of equity investment held by Y Company on its financial statements.Finally,the case study of this thesis is introduced.That is,Y company made the transformation among equity investments and made 9.3 billion yuan of non-business income.The fourth part is case analysis.Firstly,it analyzes the impact of the transformation among equity investment,and then it analyzes the problems of transformation,including the perspective of accounting information quality requirements and the comprehensive evaluation of this transformation.Then it analyzes the reasons for the transformation of Y company's equity investment.At the last of this part,it predicts the impact of the new accounting codes on the behavior of such earnings management.The fifth part is the recommendation and conclusion including the respects of the listed company itself,external report users,government supervision and improvement of accounting codes,it explores the causes and inspirations of the problems and make corresponding suggestions.Finally,the conclusion of this article is summarized.Making profits through transformation of equity investment is just a digital game,and it does not bring real cash flow to the company.With the implementation of the new financial instrument codes,listed companies need to reclassify financial assets,and both regulators and listed companies should take this issue seriously to take responsibility for investors.The innovation of this thesis is that the current academic research on the earnings management of equity investment is generally focused on the classification and disposal of financial assets.In terms of the transformation among equity investments,scholars usually focus on earnings management through manufacturing investment income.This is a rare case because Y Company generated a large amount of non-business income due to the stock market's share price falling below its net assets and thus reclassifying its equity investment.Therefore,this thesis analyzes if this kind of transformation is compliant and enriches the research on the earning management methods of listed companies.At the same time,it analyzes the premise of this kind of earnings management method,and then puts forward suggestions for the improvement of accounting codes,so that the space of using earnings investment for earnings management is further reduced.The limitation of this thesis is that the new financial instrument codes will implement in listed companies in January 2019.This thesis can only predict the impact after implementation,but the actual situation would be affected by many factors,so it needs to be verified by time and practice.