Study On The Impact Of Comment Letter On Earnings Management Of M&A Companies

Since the eighteenth congress,regulators continue to promote "supervision according to law,the comprehensive supervision and strict supervision",continuously strengthen information disclosure regulation requirements,especially in 2013 the implementation of the system of information disclosure through train,information disclosure supervision emphasis has shifted in matter,afterwards,comment letter system gradually become one of the important means of supervision and Shanghai and Shenzhen stock exchange.In the context of China’s transition economy,information asymmetry is a serious problem in the process of mergers and acquisitions transactions of listed companies,and managers are more inclined to seek personal gains by manipulating earnings.Therefore,it is of great significance to study the impact of M&A comment letter on earnings management of M&A companies.Based on the special background of China’s transition economy,this paper selects the major asset reorganization events of Shanghai and Shenzhen A-share listed companies from 2014 to 2020 as samples to explore the relationship between M&A comment letter and earnings management of M&A companies.The results show that the comment letter can significantly inhibit the accrual earnings management level,but not the real earnings management level.The characteristics of M&A comment letters are further detailed.From the perspective of receipt and reply letters,the more times M&A companies receive comment letters within a year,the more significant the inhibition effect of earnings management.The delay in replying to the inquiry letter by the M&A company has a more significant inhibitory effect on the management of accrual earnings.When examining the internal and external governance environment,it is found that the higher the quality of internal control,the more significant the inhibiting effect of M&A comment letter on earnings management.The higher the degree of external market competition is,the more significant the inhibiting effect of M&A comment letter on accounting earnings management is.Further analysis shows that analyst attention has a mediating effect on M&A inquiry letter and accrual earnings management.Based on the above research results,this paper puts forward the following suggestions: regulators should strengthen the supervision of real earnings management;To realize the combination of penalty measures and non-penalty supervision of comment letter,so that the comment letter can play a more powerful supervisory role;Regulators should lead companies to improve internal control system and form an effective internal governance environment;At the same time,regulators should strengthen the supervision of inquiry letters for companies at competitive disadvantage in the industry.