Research On The Earnings Management Of Refinancing Enterprises Under Semi-Mandatory Dividend Policy

In order to guide listed companies to establish stable cash dividend policies and improve the efficiency of capital allocation in the capital market,the Decision about Revising Certain Regulations on Cash Dividend of Listed Companies promulgated by China Securities Regulatory Commission in 2008(hereinafter referred to as the Decision)and subsequent supplementary policies issued link the eligibility of listed companies for equity refinancing to the level of cash dividend,which was called "semi-mandatory dividend policy".The introduction of this series of policies has had a significant impact on the refinancing activities of listed companies.However,some scholars argue that the policy may have a regulatory paradox in that it increases the cost of equity refinancing for growth companies with refinancing needs,while failing to increase the number of companies that should have increased dividend levels.On the basis of refinancing research and earnings management theory,this paper chooses Company Z as the case study object,analyzes the plan and process of rights offering financing of Company Z in depth,and examines the degree of earnings management through the total accrued profit model and the extended modified Jones model.It is found that Company Z may have implemented negative earnings management by adjusting commission fees and other financial expenses,exchange gains and losses,credit impairment losses and other means,so as to reduce the refinancing cost generated by cash dividends;At the same time,this paper analyzes the earnings management motivation of Company Z,evaluates the shortterm and long-term market reflection of the stock price and the overall performance of Company Z after the implementation of earnings management,and finds that market investors are pessimistic about the rights offering of Company Z,and the growth potential needs to be improved.Finally,based on the case analysis,this paper comes to the following conclusions: First,under the semi-mandatory dividend policy,under the condition of meeting the performance conditions of public stock offering(including rationed shares and public offering),Company Z often carries out negative earnings management during the reporting period to achieve a smooth decline in profits.Combined with the adjustment of cash dividend policy,the front-end cost of refinancing cash dividend is ultimately reduced.Second,after the completion of equity refinancing,the performance of listed companies generally shows a downward trend.However,under the condition that the qualification of equity refinancing is not affected,Company Z chooses to carry out negative profit smoothing during the reporting period to ensure the "no changes" of performance after the successful refinancing.In addition,this paper comes up with some suggestions for policy improvement based on the analysis results.The disadvantage is that there may be small sample bias if only a single case is taken as the research object.