The Research On The Earnings Management And Cases Of NED CO.,LTD.

Earnings management is gradually becoming a hot issue of concern in the capital market of our country especially in the stock market. Earnings information plays a fundamental role in the company decision and investors’ decision-making, at the same time its importance is self-evident. Investor’s attention on listing corporation disclosure of earnings information is always very high. Listing corporation take the use of earnings management to adjust the financial statements occur frequently. Such action not only interfere the normal environment of normal capital market and make the quality of enterprises in market different, but also easy to affect the investment decisions of investors and cause extremely bad influence. Especially since the implementation of Special Treatment system, senior managers tend to use earnings management to interfere the normal business activities of enterprises. The key of large-scale theory studies has focused on the empirical study on the mechanism of earnings management. However, the method of cases research could see the phenomenon through the appearance to the essence, more in-depth demonstrate the enterprise earnings management motives and means.The cases research study method used in this paper to describe the earnings management about the NED CO.,LTD. from 2001 to date. Initially found that company conducts the earnings management by some means but in fact the environment of that company has not improved. Firstly introduces the background and significance of the research and summarizes the main content and methods of the research. Secondly, review the existing concept of earnings management, motivation theory and methods. Earnings management is a set of management decision, this decision cause the result of that management could adopt various means to achieve the desired profit without considering the user’s needs purposefully within the limit of accounting standards. The motivation of earnings management mainly explained from three directions, the financing motivation, contract motivation and the political cost motivation. The specific methods of earnings management include four aspects, reversal of impairment loss, related party transactions, the reorganization of assets and the government subsidies. Once again, according to the research of the actual situation of the case company analysis the reasons of earnings management by various means on the basis of the theory. The detailed reasons are the failure of corporate governance, the weakness of the external constraints, to avoid the risk of delisting. Finally, according to the results of the analysis, draw the conclusions and make recommendations about earnings management from the point of standardizing the disclosure of accounting information, enhance the level of corporate governance and strengthen the intensity of supervision.