Research On Earnings Management Behavior Under Corporate Financial Distress

Studies have shown that earnings management is widely found in listed companies in China,among which *ST companies are the worst.Because the information managed by earnings management cannot reflect the business performance of the company in a fair manner.This can make it difficult for information users to accurately measure the value of the company.At the same time,some methods adopted by earnings management are at the cost of abandoning the future profitability of the company.Therefore,it is particularly important to identify and suppress the earnings management behavior of these companies.The study of this article has certain theoretical and practical significance.Lutianhua has been in financial difficulties since 2013 and has suffered huge losses year after year.In 2015,it was cautioned against the delisting risk.In 2016,the warning was withdrawn,but in 2016 and 2017,huge losses occurred again.This article will use the case study method and Lutianhua as the research object,and take Lutianhua's financial dilemma in turning deficits into profits as the entry point in 2015 to analyze Lutianhua's implementation of turning losses in a financially difficult situation.The motives of earnings management,the conditions under which earnings management can be implemented,and the subsequent impact of earnings management and earnings management,reveal that the use of earnings management in 2015 to make up for losses has temporarily eliminated Lutianhua from delisting risk.However,this approach cannot enable the externally disclosed statements to fairly reflect the true performance,but will also overdraw future operating results,making profitability unsustainable and the company's business development further restricted.Based on the research and related expansion of Lutianhua's case,this paper puts forward four suggestions for curbing the earnings management behavior of *ST's company: perfecting the listing and delisting system;reduce the surplus management space in accounting standards;improving the ownership structure and avoiding monopoly;strictly controlling government subsidies.