ST Yaxing Earnings Management Behavior Research

ST system is an important measure to maintain the long-term stability of China’s securities market.An important purpose of this system is to objectively and justly judge the real operating conditions of listed enterprises and help investors to make rational decisions.However,in the actual operation process,a large number of ST companies use a variety of earnings management means,rather than trying to improve their operating conditions in a reasonable and legal way.This problem has been widely concerned by the academic and practical circles since it was put forward in the 1980s.Earnings management is widely existed in China’s listed companies,especially in ST companies.This paper chooses ST Yaxing,which has been listed in 2001 and has been listed by the end of 2020 for three times,as the case study object.In 2013,it was warned to be delisted because of two consecutive years of losses,and then it was marked with*ST because of two consecutive years of negative net profits.In 2019,the company responded to the call of the local government to relocate the factory as a whole.Since the production site of the company has been completely suspended and it is expected that the production will not be fully resumed within the next three months,the company actively applied to the Shanghai Stock Exchange for implementing other risk warnings on the stock.Since 2019,ST is according to the local government asked to shut down move to industrial park,so we don’t do the analysis,a recent "pick hat" in 2016,so this paper mainly in 2016 for the study of the intermediate point of time.Firstly,a series of earnings management behaviors adopted by Yaxing Chemical were identified based on the company’s abnormal financial performance and the detailed data value analysis of financial statements,the comparison of comparative analysis with the average level of the same industry,and the major events outside the statement.Using case analysis method to make a concrete analysis,the company has the use of related party transactions to dispose of non-current assets to adjust the amount of non-recurring profits and losses,manipulation of production and sales and expenses,artificial subjective choice of asset impairment and inventory depreciation time,accept large government subsidies and donations from related party companies;Secondly,to analyze from two aspects of financial and stock markets by earnings management "cap" picked the repercussions of this behavior,use ratio analysis in terms of financial impact of yaxing "cap" picked before and after two years of profitability,development ability,solvency and operation of the four comparative analysis,found that not only did not improve it fell even as "cap" picked before.In terms of the impact of the stock market,the event study method is adopted to analyze,among which,CAR test is used for short-term market performance analysis,and BHAR is used for long-term market performance analysis for three years after "removing the cap".It is concluded that earnings management has a very short positive effect on the market Therefore,blindly relying on earnings management means to "remove the cap" did not fundamentally improve the company’s operating conditions,so that the company into a "loss of profit loss" in the endless cycle;Finally,five problems are found in the case study of this paper,including the lack of corresponding checks and balances of major shareholders,the lack of independence of external audit,the loopholes in the special treatment system of ST,the irregular information disclosure,and the blind reliance on the support of the local government to accept external donations.In view of the problems found above,the following suggestions are put forward,such as establishing a relatively balanced ownership structure,improving the internal control system,quantifying the performance evaluation indicators in the ST special treatment system,accepting various supervision in releasing information to the outside world,and strengthening responsibility to people in granting subsidies to government departments.This also gives some companies facing delisting pressure an inspiration:we should ensure the authenticity of the financial reports released to the outside.Turning a loss into a profit is not to whitewash the financial statements,but to improve profitability and operating conditions based on the actual situation.