Earnings Management In Goodwill Impairment Of Guangyi Technology And Economic Consequence Analysis

Goodwill is a highly concerned topic in the current accounting field.Because the accounting standards stipulate that goodwill is unrecognizable,and its impact on enterprises is very significant,the industry’s discussion on goodwill is fierce and has not been able to form a unified identification.Since 2018,China’s capital market has witnessed frequent goodwill "thunderbolt" incidents,and many companies have made substantial impairment preparations for goodwill within two to three years after the merger.Goodwill impairment is often not an independent phenomenon,which is usually accompanied by earnings management of listed company management.Therefore,through the analysis of earnings management and economic consequences in the impairment of goodwill of listed companies,this paper hopes to alarm investors,and provide some suggestions for the supervision of China’s capital market and the improvement of goodwill standards.The impairment of goodwill is often not an independent phenomenon,and it is usually accompanied by the earnings management of the management of listed companies.As we all know,accounting earnings as the key information in financial reports,authenticity and reliability have always been the most basic requirements,and excessive earnings management will lead to distortion of accounting information,it is likely to cause losses to investors.Therefore,this paper analyzes the earnings management and economic consequences of the impairment of listed companies’ goodwill,and hopes to provide an alarm for investors,and at the same time provide some suggestions for the supervision of China’s capital market and the improvement of goodwill standards.Based on the above background,this paper uses the case study method and the event research method to analyze the following contents:(1)Guangyi Technology has overestimated the risk of the merger goodwill of Suorui Electric at the initial confirmation,and it is not appropriate to use the income method for value evaluation.In the subsequent measurement,the impairment test was not carried out in accordance with the requirements of the standard.The estimation of the recoverable amount of the asset group was inappropriate.The provision of impairment of goodwill was subjectively influenced by the management and deviated from the economic essence of goodwill;(2)The management of Guangyi Technology has strong earnings management motives,including capital market motives and executive personal motives,and goodwill impairment and intangible asset impairment are likely to be the means of earnings management;(3)Guangyi Technology’s surplus The response of management in the capital market is negative,and the short-term and long-term market reactions of earnings management behavior are negative;(4)Earnings management behavior also has a greater impact on Guangyi’s business performance indicators,and will make the company profitable.,operational capacity,and growth ability have all reached a lower level.Finally,this paper draws inspiration from both the company and the investor level,and proposes relevant recommendations on the regulatory level and the standard level: the merger and acquisition of listed companies should fully consider the internal and external environment to prevent deviating from the actual goodwill and reduce the goodwill.In the value test,the expected future situation should be fully considered;small and medium investors should focus on goodwill when investing,including the formation of goodwill and whether there is any indication of impairment;the regulatory layer should strengthen the restrictions on important parties;Accounting standards may consider refining the asset group recognition criteria and exploring the pattern of amortization and impairment of goodwill.