ZH Enterprise (*ST) Earnings Management Case Study

Under the great pressure of protecting the market,many *ST enterprises that are difficult to profit through normal operation in a short time will choose to find the loopholes of system and law,and use the earnings management method to turn losses into profits.Therefore,it is important for investors and market managers to know and understand the method of earnings management of these enterprises.Firstly,this paper analyzes the whole special treatment situation of *ST enterprise,and finds that since the implementation of the delisiting risk warning system,495 times of the delisting risk warning system have been implemented,including 413 companies,while 343 times of withdrawal of delisting risk warnings,including 304 companies,and the cancellation rate of special treatment is 69.29%.From this point of view,why can most *ST enterprises make a profit in the third year? How do these enterprises turn losses into profits in a short period of time?Then,through the experience analysis method,we can find out that the existence is probably realized by the way of earnings management.Then,taking *ST ZH enterprise as the case study object,the paper makes a concrete analysis on the effect of earnings management motivation,condition,means and earnings management on the long-term performance of enterprises.Finally,it summarizes the enlightenment and gives some suggestions.Through theoretical elaboration and case analysis,this paper draws the following conclusions: First,the loose market policy,the imperfect accounting standard and the regulatory system provide the conditions for the earnings management of the *ST enterprises.Under the pressure of the multiple factors of the market-preserving motivation,the financing motivation,the executive compensation motivation and the political motivation,the *ST ZH enterprise chooses to use the earnings management method to whitewash the statements.Secondly,there are three main methods of earnings management in *ST ZH enterprises: To use the loss of assets,to dispose of assets and to use government subsidy;Third,on the basis of theabove case analysis,it summarizes and gets the following enlightenment: improve accounting standards of enterprises,improve information disclosure system,improve external audit system,establishing a sound and reasonable compensation system,perfecting the financial management system,perfecting the internal control system and improving the investment level of the small and medium-sized investors.