Study On Earnings Management Under Goodwill Impairment

Surplus management was first used in foreign capital markets.Since the reform and opening up,with the rapid development of China’s economy,China’s listed companies and companies preparing to be listed began to use earnings management in large quantities,which has a certain negative impact on the development of the company itself,external information users and the capital market.Although after more than 30 years,the accounting circles around the world have conducted in-depth research on earnings management,but in theory,the definition of earnings management is not consistent.The results of this case will help to enrich,expand and standardize the company earnings management theory,help external information users correctly assess the company’s earnings management behavior,weaken the influence on external information users,so as to protect the legal rights of a corporation,for the company’s earnings management policy advice,so as to improve the company’s living environment,to promote the sound development of capital markets,the stock market reform will be further deepened.Goodwill and goodwill impairment are very concerned issues in the current accounting theory and practice.The reason is back in 2014,when The State Council issued a document to promote mergers and acquisitions,which triggered the fourth wave of mergers and acquisitions in China.Therefore,many enterprises have set aside a large amount of goodwill impairment provisions within three years after the merger and acquisition,resulting in a decline in operating performance,damage to profits,and damage to the interests of minority shareholders.The frequent occurrence of the "black swan" events of goodwill impairment has prompted the company to deeply reflect on the valuation of goodwill,goodwill impairment provisions and the management of earnings.Using literature research,case study and model analysis,we select Shandong Mulong as the research object and comprehensively analyze the means,motivation and economic consequences of earnings management using goodwill impairment.First of all,on the basis of information asymmetry theory,signal transmission theory,principal-agent theory and elastic theory,in the domestic and foreign scholars on the causes and economic consequences and goodwill impairment management motivation,means and economic consequences,this paper takes Shandong mo ong company as an example,theoretically discusses the accounting treatment of goodwill impairment,earnings management motivation and economic consequences of earnings management.Secondly,the initial recognition of goodwill and the means of earnings management using goodwill impairment are expounded from the perspective of both parties.Then use the revised Jones model further quantitative analysis of the behavior of earnings management,and using entropy value TOPSIS method and the Shandong ink dragon through the use of goodwill impairment earnings management short-term and long-term economic consequences,and the conclusion is that Shandong ink dragon financial management through goodwill impairment earnings management and non-financial performance had a negative impact,is not conducive to the long-term development of the company.This is bad for the long-term development of the company and requires supervision.Finally,it is concluded that the regulatory authorities should strengthen supervision,reduce the earnings management behavior of enterprises,standardize the initial measurement amount of goodwill,and improve the goodwill disclosure system.