Research On Earnings Management Behavior Of Aikosolar Under Performance Commitment

At present,many high-growth enterprises will choose to find another way to quickly enter the A-share market to achieve capital expansion,usually adopt mergers and acquisitions to obtain control of listed companies,and make full use of the "shell resources" of listed companies,so as to achieve the purpose of large-scale financing.However,due to the existence of information asymmetry,the target company is likely to adjust and manipulate the relevant information of the underlying asset in order to obtain a higher valuation premium in the transaction process.At the same time,in the context of high valuation and high premium,a considerable number of mergers and acquisitions will choose to sign high performance compensation commitment agreements,thereby forming constraints and incentive effects on the target enterprises to reduce M&A risks.If the target company does not meet the high performance commitment and triggers the compensation agreement,this will become a "catalyst" for the enterprise to carry out earnings management.In the context of Chinese imperfect performance commitment system,in order to avoid high compensation agreements or reduce the amount of compensation they face,target enterprises will more actively use surplus management to whitewash the profit level to achieve target performance.However,this kind of "exhaustion and fishing" approach will cause serious damage to the long-term interests of small and medium-sized shareholders and the healthy development of the company.Based on this background,it is urgent to standardize the company’s earnings management behavior under performance commitment.This is of great significance to enrich the research related to the correlation between Chinese performance commitment system and surplus management behaviour,effectively reduce the pressure of M&A risks in the capital market and protect the vital rights and interests of investors.This thesis uses a cross-sectional analysis and a longitudinal analysis to examine the surplus management behaviour of companies under performance commitments,using the case of Aikosolar’s Listing of ST Xinmei.Combined with the performance completion and operation status of Aikosolar during the commitment period,the motivation of the company to carry out earnings management behavior under the background of performance commitment is analyzed.Using a combination of empirical identification and model testing,the extent of surplus management was examined,and the extent of surplus management undertaken by the company during the performance commitment period was specifically identified from both financial and non-financial indicators.On this basis,the economic consequences of the company’s earnings management behavior are analyzed from the two dimensions of financial performance and market response.The results indicate that Aikosolar ’s primary motivation for surplus management is to meet high performance targets so as to avoid high compensation and to send positive signals to the market on an ongoing basis in order to boost the share price,as well as to avoid the attention of regulators.During the performance commitment period,Aikosolar mainly used earnings management means to reduce discretionary expenses,manipulate the advance payment for goods and inventory decline reserve,and use bill settlement to adjust performance.Although the above means can whitewash the performance level of the enterprise for a short period of time and bring short-term benefits to the minority shareholders,it is detrimental to the healthy development of the enterprise and the long-term interests of the minority shareholders in the long run.Based on the above analysis,this thesis makes the following recommendations on the surplus management behaviour of companies under performance pledges: optimise the valuation mechanism of the underlying assets to reduce the possibility of surplus management behaviour at source;improve the operation mechanism of performance pledges to stimulate the driving effect of the performance pledge system on corporate value;strengthen the constraint mechanism of the external environment to force the underlying companies to operate honestly and ensure the rights and interests of relevant stakeholders.