Research On The Causes And Consequences Of Longlive's Performance Worsening Of Management Earnings Forecasts

As forward-looking financial information reflecting the company's development prospects,management earnings forecasts have important value.Therefore,they have long been highly concerned by investors,creditors and regulatory agencies.Real and reliable management earnings forecasts can convey a good signal of healthy development of the company,enhance the confidence of investors and maintain the order of the capital market.However,in recent years,the phenomenon of performance worsening of listed companies has occurred frequently in China's securities market,which not only misleads investors' decision-making and damages the investors' interests,but also undermines the seriousness of the system and disturbs the order of the capital market.Based on this background,this paper takes Longlive as the research object and studies the causes and consequences of performance worsening of Longlive's management earnings forecasts.Firstly,combing the performance worsening event of the case company's management earnings forecasts and analyzing the characteristics and the incentives of performance worsening.Secondly,the causes of performance worsening are discussed from three aspects.Since the performance forecasts are completely predicted by the management of listed companies,so it is inevitable that the performance forecasts will be manipulated artificially.From a subjective level,the management has an incentive to use incorrect profit forecasts to cover up the company's financial distress,to make profits for the executives by reducing the stock,and to meet the company's financing needs.Finally,discussing the consequences of the performance worsening of the case company's management earnings forecasts from the aspects of capital market,regulatory authorities,online media and the company's sustainability.Longlive is in a financial distress situation and still publishes high profit forecasts in the state of financial distress,trying to cover up the company's financial distress.In the state of financial distress,by issuing high profit forecasts to stabilize stock prices,it facilitates the reduction of executives' stocks.In addition,the company used false high earnings forecasts to mislead creditors and suppliers,thereby reducing financing costs and catering to their own financing needs.The performance worsening of Longlive's management earnings forecasts not only caused a sharp change in the stock price,but also triggered a strong reaction in the capital market.At the same time,it also caused inquiries and warnings from the regulatory authorities and negative reports from the online media.As a result,the company's sustainability has declined.Based on the above theoretical and case studies,putting forward relevant suggestions from four aspects: listed companies,small and medium investors,regulatory authorities and online media,so that the management earnings forecasts information can provide important value for investors,effectively protect the interests of investors,and promote the stable development of the securities market.