Impact Of Earnings Management On The Improvement Of ST Companies’ "Uncap"

It is generally believed that earnings management is the behavior of the company management to intervene or control the earnings information of the external financial reports in order to maximize their own interests.Based on different motivations and pressures,enterprises may have different degrees or types of earnings management activities.For ST companies,in order to maintain the listing qualification and preserve the precious "shell resources",if they can’t improve their operating performance and turn losses into profits in the short term,the company managers will have strong earnings management motivations.Because of different types of earnings management methods have different functions and implementation costs on the "uncap" of ST companies,which method of earnings management to choose depends on the rational and subjective willingness of the ST companies’ management: that is,to achieve "uncap" and meet the ST listed companies’ needs to realize maximized utilit at the minimum cost.It could be preferred earnings management for ST companies’ management.It is a relatively mature and perfect capital market to "enter and exit in an orderly way",let the market survive the fittest and give full play to the function of optimizing the allocation of resources.Delisting system itself is an important part to ensure that the capital market elimination mechanism plays an important role,and it guarantees the efficiency of the capital market to a certain extent.For a long time,Chinese delisting system mainly focuses on a single profit index,and has taken net profit as the assessment standard.Listed companies used to give delisting risk warnings for two consecutive years of losses.On June 28 th,2012,China gives a major change to the single delisting standard system,adopting diversified indicators such as net assets and operating income to further improve the ST system and delisting system.Compared with the previous single delisting standard,the diversified delisting standard system makes ST companies face a more stringent regulatory environment.After the change of the delisting system,has the motivation of the management of ST listed companies to use earnings management to improve their financial conditions been suppressed?Under the background of the change of delisting system,will the management of ST companies change the way of earnings management in order to achieve the purpose of"uncap"?During different accounting periods,are there any difference in the impact of different earnings management methods on the improvement of ST companies?Has the management’s preference for earnings management changed?To provide answers to the above questions is helpful to scientifically discuss the economic consequences of market regulation and objectively evaluate the policy effect of delisting system change,which has important policy implications for regulators.This paper takes A-share listed companies in Shanghai and Shenzhen stock exchanges from 2007 to 2018 as the research object,selects ST companies which are specially treated for triggering financial discriminative indicators as the research sample,empirically tests the impact of various earnings management methods on the "uncap" of ST companies from "star cap" to "uncap" under different delisting systems,and further investigates the impact of different delisting systems before and after the change of the stock market system,whether the management’s selection tendency of earnings management has changed during different periods.The main conclusions are as follows:(1)Under the single delisting standard system,accrual earnings management,real earnings management and classified transfer earnings management have positive impact on "uncap" of ST companies;compared with real earnings management,the executives of ST companies is more inclined to achieve "uncap" through accrued earnings management and classified transfer earnings management.(2)Under the diversified delisting standard system,the positive effect of accrual earnings management on "uncap" of ST companies is weakened,the positive effect of real earnings management on "uncap" of ST companies is enhanced,while the classified transfer earnings management has no significant effect on "uncap" of ST companies;after the delisting system was changed in 2012,compared with accrual earnings management and classified transfer earnings management,the executives of ST companies is more inclined to achieve "uncap" through real earnings management.In a word,the change of delisting system has a certain governance effect on ST Companies’ use of accrual earnings management and classified transfer of earnings management,but it also induces the management of ST companies to turn to real earnings management with higher concealment.