Case Analysis Of Earnings Management During Performance Commitment Period

Performance commitment is an important part of corporate M & A.It is beneficial to protect minority shareholders,support the merger and acquisition premium,and promote the successful completion of M & A.Generally speaking,in the case of corporate backdoor transactions,the backdoor company injects capital and makes performance commitments;the shell resource company is guaranteed the expected return.The size of the promised return depends largely on the valuation of the injected assets.For companies that make performance commitments,timely disclosure of profit expectations is a mandatory requirement of securities regulatory authorities.The disclosure of earnings directly affects the confidence of the securities capital market and investors’ demand for their investments(stocks).In order to maintain a good capital market image of listed companies and to avoid the dramatic fluctuations in cash and stock market caused by default,some performance-commitment companies often perform earnings management during performance commitments,and the motivation and methods of earnings management are also different.How to analyze the performance commitments and earnings management issues of backdoor listed companies,prevent backdoor listed companies from inflating corporate profits and corporate value,better protect the healthy development of the securities capital market,and better protect the interests of investors,especially SME investors,It has become an important issue that people pay close attention to.According to the above,this article selects Yinji Entertainment and Media as the research object,which has the characteristics of "high valuation","high performance commitment","accurate completion",and "change of performance".Firstly,the background and significance of this topic,the research ideas and methods,and the innovation points are introduced.Secondly,it introduces the related concepts and theories,the motivation and methods of earnings management behavior,etc.,and provides the theoretical basis for the subsequent case studies.Then,it introduces specific cases of earnings management during the performance commitment period of India Media.Finally,this article analyzes the effect of the case and its impact.Through case analysis,this article draws the following conclusions and implications.Conclusion:(1)Both sides of the backdoor tend to sign performance commitments;(2)Excessive performance commitments intensify corporate earnings management;(3)Earningsmanagement makes short-term profits for small and medium shareholders;(4)Investors’ long-term interests are damaged after performance changes.Enlightenment:(1)Improve performance commitment system and avoid blindly signing performance commitments;(2)Optimize asset pricing rules to avoid excessive performance commitment;(3)Improve the supervision system and strengthen earnings management supervision of performance commitments;(4)Improve investors understanding of performance commitment earnings managementThe main contribution of this article: Based on the actual situation of earnings management during the performance commitment period of backdoor listed companies,the introduction of backdoor listing performance commitment cases with characteristics such as‘high valuation’,‘high performance commitment’,‘accurate completion’,and ‘change in performance’.The specific analysis and evaluation of the economic consequences and impact of earnings management during the period of performance commitments during the backdoor listing transaction that exacerbated the value of the assets that were exorbitantly increased.Proposed prudent valuation of the underlying assets,the parties made reasonable performance commitments,and the supervisory authorities strengthened pre-event and post-event supervision.And other suggestions to provide reference for other companies in the use of backdoor listing performance commitment policies.