Analysis On The Earnings Management Of Major Assets Restructuring Activities With Performance Commitment In CCS Corp.,Ltd.

Transaction pricing is an important part of Major Assets Restructuring activities.To inhibit the unreasonable asset evaluation price,CSRC published the regulation of the Major Assets Restructuring activities in 2008,it claims that purchase of assets by issuing shares shall provide the profit forecast report.By taking the income method,hypothetical development method etc.,which based on expected future earnings of the assets to be purchased and evaluated as a pricing reference,the listed company shall separately disclose an annual report within 3 years after the completion of the Major Assets Restructuring activities,in which the discrepancies of actual earnings and the performance commitment of the assets shall be informed to the public,besides the accounting firm shall issue a special audit opinion on the report,and the counterparty shall sign a clear and feasible compensation agreement with the listed company in relation to the actual earnings of the injection assets and the lack of commitment performance.In 2014 CSRC issued the newest regulation,which has also followed the provisions above.As a contractual tool to adjust the price of the transaction,performance commitment has been favored by more and more enterprises.According to statistics,from 2009 to 2016,637 listed companies issued a performance commitment announcement.Performance commitment has played an important role in alleviating the distortion of transaction pricing,weakening the information asymmetry between the two sides of mergers and acquisitions,and protecting the interests of minority shareholders in Major Assets Restructuring activities.Due to the existence of asymmetric information,external shareholders can not understand the situation of enterprises timely.Usually management authorities need to transfer the company's internal situation out,and investors can make decision according to the information.Among them,performance announcement is one of the frequently used means of transmitting signals.For listed companies with performance commitments,timely disclosure of earnings forecasts is mandatory for securities regulatory authorities.If the report shows performance meet the performance commitments,this sends a good signal to investors that the business is doing well,and the development potential is huge,investors will be more confident about the future development,and chase to buy company stock,the company's stock price will rise.Another case is that the company made a performance announcement,which shows that the results of the operation failed to achieve the original commitment performance,itwill cause negative evaluation to investors,they will think that the company's operating capacity is not good.If the difference between the announcement performance and the commitment performance is too large,there is a significant valuation bubble in Major Assets Restructuring activities,which can be a major blow to investor confidence.Managers may pay more attention to the earnings disclosed in annual report under the contract of performance commitment in order to achieve the commitment performance.In such a situation,studying the performance commitment of earnings management in the aspects of theory and practice is necessary.In this thesis the normative research method,comparative analysis method,theoretical analysis and case analysis,qualitative analysis and quantitative analysis method are used.On the basis of systematic review of domestic and foreign research literatures,we use the example of CCS,studied the earnings management behavior of the listed company with performance commitment in Major Assets Restructuring activities.CCS completed listing in 2012,the committed performance of the company is that the net profit owned by its major shareholder from 2012 to 2014 should be not less than 377 million,444 million and 489 million.If the commited performance can't be reached,major shareholders will take payment of stock shares to compensate for the difference between the disclosed performance and the commited performance.Through the audit report and annual report issued by certified public accountants,we found that the performance of each year is with a accurate complete compared to the earnings of the commitment period and the amount of commitments.The results show that:(1)Performance commitment induced the earnings management behavior;(2)Minority shareholders obtained short-term benefits because of earnings management within commitment period;(3)Earnings management damaged the interests of the minority shareholders after the performance meet the commitments.This thesis proposes the following recommendations:(1)Improving asset pricing rules to ensure fair trading consideration.(2)Improving the information disclosure system to reduce the degree of information asymmetry.(3)Improving the relevant system of performance commitment to limit the means of earnings management.(4)Strengthen the supervision of performance commitment companies to identify major impact projects.(5)Stregthen the research of earnings management to break through the blind spot of current research.