Earnings Management Of Listed Companies Government Involvement

In the context of a market economy, government regulation of economic development in the region by way of government subsidies are common occurrences. On the one hand, government subsidies can indeed promote the development of local enterprises; on the other hand, the government also hopes to develop local businesses can promote economic development in the region, to improve the employment situation in the region, to construct good investment environment, to increase local GDP, to improve the performance of government officials level, to achieve their political objectives. Based on the above purpose, in practice, government subsidies often become the tool for government to manipulate profits and participate in corporate earnings management. In the case of the TCL Group’s analysis, we found that government subsidies have become key factors that constitute the Group’s profit and cash flow, despite the short-term performance of the Group has been significantly improved, but in fact, TCL Group’s growing dependence on government grants enhance the core competitiveness of the Group resistant to the survival and development are slowly lost. Over time, the group is easy in a passive position in the fierce market competition. With economic development, increasing the size of government subsidies, grants broad range gradually changed. Therefore, the research questions in the practical application of government grants and the impact produced have a strong practical significance.In this paper, first in reference to the relevant literature, based on the analysis of the theory of government subsidies and earnings management, and then combined with case studies of the TCL Group to participate in government subsidies motivation of earnings management of listed companies, as well as means of implementation effects for the above study. As a result, we put forward policy recommendations. The content is divided into the following six sections:The first chapter is the introduction. The main issue is to propose to explain the background and significance, indicating research ideas, methods and framework of this paper, and then analyzes the lack of research and innovation in this paper.The second chapter is the Review and abroad. And summarized the relevant government subsidies and earnings management literature at China and abroad, the theoretical basis for the study of specific follow-up article.The third chapter is the theoretical study of government subsidies and earnings management. Respectively, from stakeholders, asymmetric information and agency theory point of view of the government research grants, and analyzes the significance of direct and indirect government subsidies meaning; then, based on the "Contract friction" and "communication friction" and "economic outlook income" and " information Concept " angles elaborated the theory of earnings management, earnings management have finally found financing, tax savings, reduce costs and decrease the risk of default of political motivation.The fourth chapter studied the motivation of government involvement in earnings management, tools and disadvantages. Found that the government often in order to protect the local level and improve their performance with financial subsidies or tax concessions ways to help listed companies, listed companies involved in the earnings management. This behavior will destroy the order of the capital market to a certain extent, will affect the implementation of the government budget.The fifth chapter is the TCL Group to study the relationship between government subsidies and earnings management of cases. First, a brief introduction of the TCL Group’s development stage and operating conditions; Secondly, government subsidies given to the size of TCL Group, why and how; again, focusing on the impact of government subsidies on the TCL Group’s profit and cash flow caused; and finally of TCL Group, made the case summary.The sixth chapter is the conclusion and recommendations. Summing up the above findings and make recommendations. This paper argues that the government should promote listed companies to strengthen core competitiveness, to improve the legislative branch of government subsidy standard, system-related supervision departments should strengthen the supervision of listed company earnings management, investors do have to make decision calmly and invest rationally.