Study On The Reason Of "Changing Face" In Tianguang Zhongmao Performance Forecast

The report of the 19 th National Congress of the Communist Party of China clearly pointed out that “to forestall and defuse major risks”.The performance forecast is an important part of the information disclosure for the listed companies,and can make a good supplement to the periodical reports.It can reduce the impact on the market when the periodic reports are disclosed centrally,by disclosing the company’s business information in time,releasing the company’s performance risk in advance.Therefore,the performance forecast will give a risk early-warning.However,the performance forecast system for investor protection is often abused by the managements with ulterior motive.In recent years,the face-off events have occurred frequently.It have said that the performance forecast is to be profitable,but the annual report is to be deficit;the performance forecast is at a small loss,but the annual report is at a huge loss.Even some managements have issued false performance forecasts to help the major shareholders to reduce their holdings before the annual report is published.These false performance forecasts transmit the wrong financial information to the market,which will disturb the judgment and decision of the market participants.At the same time,it will harm the stable development of the financial market.The performance forecast has the function of performance early-warning,which has become a tool for the managements to manipulate arbitrarily,which is a serious violation of the original intention of the performance forecast system.This paper selects listed company Tianguang Zhongmao as the research object.First,it introduces its face changing of performance forecast and multiple revised performance forecast.Secondly,this paper analyzes the reasons of the face changing of the company performance forecast and analyzes the influence on the face changing of the performance forecast from company’s operating condition,the internal control level and the managements’ power.On the basis of the research on the reasons of the face changing of Tianguang Zhongmao’s performance forecast,this paper further tests the influence on the deviation of the performance forecast from the management condition,the internal control level and the management power.In this way,the author will get a more general conclusion and put forward some suggestions to improve the performance forecast system.Through the case study in this paper,it can find that the operating conditions getting worse,the poor quality of internal control and the excessive power of the management mainly cause the "face changing" of the performance forecas.The further analysis shows that the operating conditions,the level of internal control and the power of the management have a significant impact on the deviation of performance forecast.For example,when the company is at a loss,the company’s performance forecast will be in a large deviation;When the company has a high level of internal control,the deviation of performance forecast is small.However,the power of management is different from the expectations.When the proportion of management shares is high,the interests of management are consistent with the interests of the company and the deviation of the company’s performance forecast is small.When the proportion of large shareholders is higher,the power of management is smaller,the large shareholders form a check and balance on the power of management and the deviation of the company’s performance forecast is small.This paper puts forward suggestions for listed companies to reduce the deviation of performance forecast and prevent the "face changing" of performance forecast in the internal and institutional level.At the same time also remind the majority of small and medium-sized investors to carefully look at performance forecasts,improve awareness of prevention.