Ba Yi Steel(600581) Earnings Management Behavior And Results Research

With the development of the capital market,the listing has become the main platform for many companies to collect money.However,at present,the control of the capital market in our country is not enough.Many companies do not strictly follow the accounting standards,making the accounting information unfair to enterprises.Earnings management behavior provides great convenience for companies to achieve their profit goals,and excessive earnings management behavior is not only harmful to the longterm development of the company,but also to social and economic development.The Special Treatment System(ST)is a special alert system for companies,whose financial conditions are worsen or have significant finance risks in Shanghai and Shenzhen transactions.The purpose of this system is to reveal risks to investors and guide them to rational invest.After the company's abnormal situation eliminated,it can apply to remove the stock name prefix "ST" and resume normal trading.The China Securities Regulatory Commission adopted this policy to protect the interests of investors.However,there are still many “ST” companies in order to preserve their listing status,use earnings management to cover their reports.China currently lacks relevant laws and regulations to regulate the company's earnings management behavior.If we not restrain it,it will be even more rampant,ultimately affecting the development of the entire securities market.Xinjiang Ba Yi Iron & Steel Co.,Ltd.(hereinafter referred to as “Ba Yi Steel”)is the only listed company in the steel industry of Xinjiang.Since its listing in 2002,its operating performance has been good.In 2014,it was the first year that suffered a huge loss and then in 2015 it was “ST”,in 2016,it successfully remained its listing status.This article mainly analyzes how Ba Yi Steel use “earnings management” to retain market and analyze the consequences of its earnings management.The full text is divided into six parts.The first part of this article : "Introduction",introduces the research background and significance as well as the content and methods of this article.The second part is “concept definition and literature review”: The basic concepts of this article,earnings management and “ST” system,and reviewed relevant articles at home and abroad.The third part is " Background Analysis" : It introduces the whole process of Ba Yi Steel being "ST" and removing "ST" and its earnings management motivation.The forth part is “The Analysis of Earnings Management Behavior”: Analyze how ST Ba Yi Steel use Earnings Management tools such as :government grants,connected transactions,and debt restructuring to achieve profitability.The fifth part is “The results of Ba Yi Steel's earnings management”: It mainly analyzes the impact of Ba Yi Steel's earnings management behaviors.Such as: the impact on profits,the company's profitability and solvency,decision-making for corporate stakeholders,and the impact on the stock price.The last part of “Conclusion and Recommendations”: Summarizes the use of earnings management tools to achieve the protection of the city's behavior and the consequences of earnings management.Providing relevant recommendations for market regulators,business managers,and investors.Through the research of this paper,we can found that earnings management is a common method for enterprises to adjust profits,and it has the characteristics of artificiality and low recognizability.When ST Ba Yi Steel is about to withdraw from the market in 2016,the motivation for earnings management is most obvious,and it tends to adopt multiple means of earnings management at the same time.The means of earnings management such as debt restructuring and the sale of subsidiaries help companies reduce their debt burden and optimize their capital structure.However,the profit achieved by earnings management did not improve ST Ba Yi Steel's main business capability.Its sales share in the national market was still low,and the problems of high purchasing costs and high Logistics costs still remained unresolved,and its weak ability to resist market.The earnings management activities of the company have also affected the company's stakeholders(management,creditors,and shareholders)to make decisions and the performance of the securities market to a certain extent,which has affected the company's stock price and excess return rate.Through a series of analysis,we can find that if we want to achieve sustainable development of profits,we should increase our main business capabilities and reduce related party transactions.The China Securities Regulatory Commission should increase the disclosure of information on ST non-recurring projects and strengthen the supervision of listed companies,especially ST companies,to protect the interests of investors.