An Analysis Of The Motivation And Consequences Of A Huge Amount Of Goodwill Impairment From The Perspective Of Earnings Management

In 2014,the state council issued the Opinions of the State Council on Further Optimizing the Market Environment for Enterprise Merger and Reorganization,which directly triggered the “three highs” M&A frenzy of China's listed companies from 2014 to 2016,featuring high performance commitment,high valuation and high goodwill.At the same time of the rapid growth of goodwill assets,also buried the potential high goodwill impairment risk.Studies have shown that listed companies will use the huge goodwill formed in high premium of the merger for running earnings management activities,and this behavior will bring great impact on its performance,especially under the environment of capital market information opaque and the asymmetric information of small and medium shareholders.Huge goodwill impairment will damage the interests of small shareholders,which affect the stability of the capital market and medium and small investors' psychology and behavior.In this context,this paper uses the case study method to select the typical case of the listed company Zeus Entertainment's impairment of huge goodwill in 2018 for research.This paper mainly adopts literature research method,descriptive statistical analysis method and case study method to study and analyze.First of all,this paper summarizes goodwill impairment,earnings management and the relationship between goodwill impairment and earnings management through literature research.Secondly,descriptive statistical analysis method is used to analyze the status of goodwill impairment of Zeus entertainment and through comparison with other listed companies of the same industry,I found that its goodwill impairment problem is prominent.Therefore,Jones Model was used for verification analysis,and the results showed that Zeus entertainment had real earnings management activities.Finally,some suggestions are put forward from ensuring the reasonable of performance commitments,the perspectives of goodwill impairment test method,strengthening the attention to the characteristics of the industry,perfecting and strengthening the internal and external supervision mechanism and strength.