Research On Performance Commitment And Earnings Management In Major Asset Restructuring Gambling Agreements

Since year 2015,a wave of mergers,acquisitions and reorganizations has occurred in China’s capital market,which has brought about a lot of chaos in the high premium of mergers and acquisitions.One of the reasons for this is that many mergers and acquisitions and reorganization companies have increased betting agreements and set up performance commitments to convey to investors the good news of the company’s future development.And once the actual performance fails to meet the promised performance standards,the company will face huge amounts of cash or stock compensation;this also triggers earnings commitment behavior management.Performance commitments were initially applied to the western private equity market,and have not yet been widely used in China.Most of the existing literature studies are about performance commitment earnings management in the context of share reform and separation,and the research of performance commitment earnings management in the context of major asset reorganization is relatively small.In order to study performance commitment and earnings management in the context of major asset reorganization,under the support of contract theory,signal transmission theory,information asymmetry theory,efficient market hypothesis,etc.,this article accurately targets performance during the commitment period,and loses as soon as the commitment period passes.The Great Wall of China’s Great Wall is listed as an example.Using a combination of accounting research and case studies,the financial information of the Great Wall of China during the commitment period is accurately analyzed.Second,the modified Great Wall model and the accrued profit model are used to test the Great Wall of China.The degree of earnings management,then analyzes the motivation and methods of earnings management of Great Wall of China,and finally analyzes the economic consequences of earnings management of Great Wall of China.Through analysis,this article draws the conclusion that during the commitment period,Great Wall of China has positive earnings management to achieve performance standards.The motivation of China Great Wall for earnings management under the background of major asset reorganization is mainly based on capital market motivation,contract motivation and evasion of supervision.Great Wall of China is also very covert when choosing the method of earnings management.It mainly increases the profit of the commitment period through fictional income,adjustment of intertemporal profits,and false receivable factoring to reduce the provision of bad debts.After the Great Wall of China’s earnings management has brought negative economic consequences,the company’s operating capacity,profitability,debt repayment ability and growth ability are all unsatisfactory.It is doubtful whether it can continue to operate.