Research On Earnings Management By Using Non-recurring Profit And Loss

The ST system is one of the systems issued by the stock exchange for the standardized management of listed companies in China.Its purpose is to distinguish companies with financial or other operational problems from companies with normal operating conditions,so as to explain to investors Listed companies have significant investment risks.Non-recurring profit or loss is a company with a special nature and occasional gains and losses.According to the interpretation announcement issued by the CSRC,there are 21 specific items of non-recurring profit or loss.When the ST company is in order to protect its shell,it often chooses to use non-recurring profit and loss for earnings management,but when the share of non-recurring profit and loss in the net profit is too large,it will cause distortion of the company's financial information and damage investors' interests.In recent years,China's domestic fertilizer market has continued to slump,and the price of urea has continued to fall.* ST Hehua,as the key fertilizer fertilizer company in Guangxi and the only listed company in Hechi City,its main business income mainly comes from fertilizer income,which is affected by market factors The company's operating losses have continued in recent years.* ST Hehua has been experienced by ST three times in the past 10 years,and it is more obvious to use non-recurring gains and losses to turn losses into profits.This article first conducted statistics on the ST companies that removed their hats from 2014 to 2018,and found that non-recurring gains and losses have been widely used in ST companies to turn losses and played an important role.Among them,"debt restructuring gains and losses","government subsidies","non-current assets disposal gains and losses" and other items are more commonly used and have a greater impact.Secondly,by combing through the three turnaround processes of * ST Hehua and the methods used,it was found that real transactions and business activities were arranged,non-operating activities were manipulated,the hidden space of "investment income" in the income statement was used,and dependence on the local government Is the main feature of its earnings management.In addition,through the analysis of the consequences of * ST Hehua's non-recurring profit and loss management,it is found that the quality of its financial information is low,its profitability is not sustainable,its operating performance has not improved after the insurance,and the use of non-recurring profit and loss Earnings management has brought negative sentiment to the market.Finally,in view of the phenomenon of excessive earnings management,suggestions were made for stabilizing the internal governance structure,reducing the hidden space of non-recurring gains and losses,and strengthening the disclosure and supervision of non-recurring gains and losses detailed information.I hope that China's securities market can develop in a better direction.