Research On Earnings Management Of China's Listed Companies Using Related Transactions

With the continuous development and expansion of China's capital market,the issue of earnings management of listed companies has begun to emerge.Along with the trend of enterprise grouping,the relationship between listed companies and parent companies in China has become more and more complicated and vague.Related transactions have also changed from the original cost reduction and resource utilization to today's manipulation of operating profits,whitewashing financial statements,and management of earnings.This will make it impossible for investors to accurately measure the market value of enterprises,not only making investment Impaired economic interests will also hinder the healthy development of enterprises.There are various ways for listed companies to manage their earnings.Among them,connected transactions have become a common method adopted by listed companies.Therefore,it is very important to correctly identify listed companies to use connected transactions for earnings management.This article takes LeTV as an example.It has become the stock with the highest market value of China's GEM due to the rising operating profit.Nowadays,the company has been suspended from listing on May 13,2019 due to difficulties in operating and the break of the capital chain.Throughout the financial statements of LeTV in recent years,the proportion of related transactions in various financial indicators is very large,which has attracted special attention from small and medium investors.Therefore,the LeTV network is fully representative.This paper uses the case study method to discuss LeTV.First of all,the introduction part of this paper mainly introduces the research background and research significance,literature review,research methods and innovations,as the introductory part of the full text.The second chapter discusses the overall situation of earnings management of listed companies in China using connected transactions.The third chapter briefly introduces the specific situation of LeTV and related parties and a review of this case.The fourth chapter is a detailed explanation of the motivations and ways of LeTV's use of connected transactions for earnings management.The fifth chapter introduces the impact of LeTV on earnings after management.The sixth chapter is the conclusions and suggestions.It puts forward some suggestions for the problems in the earnings management of the related transactions of LeTV.It is hoped that it can be used for similar cases.