Profit Volatility,Earnings Management And Firm Value

The market value discovery function has been gradually revealed after more than 20 years development of China's capital market,but the market price irrational fluctuations still exist.Predicting the value creation ability and judging enterprise value scientifically through the analysis of enterprise information is a real and urgent research topic faced by investors,creditors and business managers.Profit volatility include important information such as profitability,operational risk and so on,but the traditional financial analysis as an important tool for the analysis of enterprise value is lack of profit volatility.The financial information disclosed by the enterprise is not consistent with the actual production and operation activities because of the exsit of earnings management.It is the main research content of this paper to study the relationship between profit volatility and enterprise value considering the impact of earnings management and introduce profit volatility and earnings management factor into enterprise value evaluation.This paper analysed the profit volatility from the perspective of real production and operation and introduced the earnings management model,thought the fluctuation of net cash flow from non-operating accruals and net cash flows from operating activities reflecting the volatility of real production and operation activities.In this paper,a total of 3,063 samples of China listed companies from 2002 to 2014 are used to analyze the relationship between earnings volatility and firm value,the effectiveness of earnings management smoothing profit to maintain enterprise value.Found that enterprise value only with the profit volatility based on real production and business activities.The negative effect of cash flow fluctuation on firm value is universal.Non-accrual accrual volatility generally has a negative effect on firm value,but the effect is not significant in low-growth or low-risk firms.For earnings management effectiveness,accrual of earnings management is invalid,production manipulation due to the high cost is lack of effectiveness,sales manipulation is relatively effective.Based on empirical results,Introduced profit volatility and real earnings management into the enterprise value evaluation by the application of MLP neural network based on Boosting integrated learning,providing a practical reference for the improvement of market approach.