A Case Study On Earnings Management For COMEC

With the continuous advancement of socialism with Chinese characteristics,China’s economic development is advancing by leaps and bounds,while China’s stock market is constantly expanding and improving.As an important part of the capital market,the quality of financial information of listed companies attracts much attention.In order to raise funds or avoid delisting,many listed companies will choose to adjust their profits through earnings management.Earnings management will lead to the distortion of financial information of listed companies,causing losses to investors,and at the same time bring serious economic consequences to listed companies,and excessive earnings management behavior will seriously disrupt the normal economic order of China’s stock market,is not conducive to the healthy development of China’s capital market.Therefore,earnings management research of listed companies is particularly important.This paper summarizes the achievement of earnings management at home and abroad,it makes a case study of COMEC earnings management by combining normative analysis with case analysis and applying relevant earnings management theories.The study content divided into three sections: Section one is theoretical analysis,based on sorting out the relevant theoretical research on earnings management at home and abroad,this paper makes a theoretical analysis on the motivation,means,influence factor,measurement model and economic consequences of earnings management of listed companies;Section two is case analysis,based on theoretical analysis,this paper briefly describes the basic situation of the COMEC,the preliminary identification of the COMEC earnings management behavior,on the basis of using Healy model and real earnings management model to test,and then to the COMEC earnings management motivation,means and economic consequences of case analysis;Section three is the countermeasure and advice,based on theoretical analysis and case analysis,this paper presents relevant countermeasure and advice for standardizing earnings management behavior of listed companies.Through the research,this paper reaches some viewpoints and conclusions.For instance: COMEC’s earnings management is mainly motivated by shell protection motivation,relieve financial pressure and managers’ desire to obtain higher compensation;Its means are mainly the use of non-recurring profits and losses,such as the use of government subsidies,the use of related party land relocation,acquisition and storage compensation,in the loss year to withdraw a huge amount of impairment and disposal of long-term equity investment,etc.Through earnings management,it has avoided the continuous losses being specially treated by ST,but its actual profitability has not been improved.On the contrary,it will not be conducive to the long-term development of the company,but also damage the interests of stakeholders,and even disrupt the economic order of the securities market.Finally,this paper argues that in order to standardizing earnings management behavior of listed companies,listed companies should strengthen earnings quality management,improve the internal governance of listed companies,in addition,it is necessary to improve the securities market supervision system,and strengthen the external supervision.This paper,through a case study of COMEC earnings management,provides reference for standardizing earnings management behavior of listed companies.