Research On Enterprise Earnings Management From The Perspective Of Derivative Instruments

At present,the pace of economic globalization is gradually accelerating,and China,which is committed to "going out",is facing the risk of sharp fluctuations in prices,interest rates and exchange rates.At the beginning of the birth of derivatives,the main purpose is to control the above risks.With the maturity and development of its theory and practice,more and more enterprises favor this emerging tool,and its application degree is also deepening.However,derivatives are a "double-edged sword" for modern enterprises,which have positive and negative effects on earnings.Improper use of derivatives may make enterprises fall into greater financial crisis.Derivative instruments have high leverage,vague information disclosure and strong ability to adjust the data in the financial statements;the impact of derivative instruments on the earnings of enterprises lags behind,and the subjectivity in the choice of accounting treatment methods leads to the stronger manipulation of earnings than traditional earnings management methods.Derivative instruments have gradually become an important means of earnings management,and play an important role in it Color.Firstly,this paper defines the related concepts of derivatives and earnings management,compares them with traditional earnings management methods,clarifies the reasons why enterprises choose derivatives for earnings management,and theoretically analyzes the purpose and means of earnings management.Secondly,taking the use of derivatives of China Southern Airlines from 2015 to 2020 as a case,this paper makes quantitative and qualitative analysis from the changes of fair value of derivatives,valuation technology and information disclosure,and determines that China Southern Airlines controls the company’s earnings through the changes of fair value of derivatives,which is embodied in the changes of investment income,financial expenses,other comprehensive income and main business cost.Using the event analysis method to analyze the short-term market performance of earnings management under derivatives,the use of derivatives of China Southern Airlines eventually increased the degree of earnings management and reduced the credibility of the company.Finally,the following conclusions are drawn:(1)due to the wrong judgment on the fluctuation trend of exchange rate and interest rate,the derivative contract of China Southern Airlines does not achieve the purpose of earnings management,but aggravates the loss.(2)China Southern Airlines’ information disclosure on derivatives is vague,which may mislead investors;(3)the key to the use of derivatives is to accurately judge the price trend of the subject matter;(4)using the fair value changes of derivatives to adjust earnings is one of the real means of earnings management,and its application effect determines the degree of follow-up earnings management and the quality of information disclosure.This paper puts forward some suggestions from the perspective of rational use of derivatives and restraining earnings management,in order to provide help for the correct use of derivatives of listed companies,the strengthening of supervision by regulatory authorities and the rational decision-making of investors.