Case Study On Earnings Management Of Listed Companies In China

With the rapid development of China’s economy and the continuous expansion of the capital market,China Securities Regulatory Commission and other regulatory agencies have issued and improved a series of laws and regulations in order to maintain the normal order of the stock market and effectively improve the supervision.Delisting risk warning system,as a special system in China’s capital market management,can help the majority of investors to identify problem stocks,reduce investment risks,so as to protect their own interests.At the same time,delisting risk warning system can give risk warning to listed companies with abnormal operating conditions and urge them to improve their operating conditions.Due to the strict audit standards for the listing of enterprises in the Company Law of China,if the listing of an enterprise is suspended due to the delisting risk warning,it will be difficult to resume the listing after the abnormal situation is resolved,and thus more financing opportunities will be lost.Therefore,listing qualification has become a relatively scarce resource in China’s capital market.In this case,the special treatment of enterprises will have an urgent incentive to "preserve the shell".However,the operating problems of enterprises facing risk warnings can hardly be effectively improved in a short period of time,so the management of the company can turn a loss into a profit through earnings management,so as to avoid delisting risk.However,earnings management behavior does not really improve the financial situation of enterprises,enterprises in the operation of problems and delisting risk still exist.Taking ST Pang Da as the case study object,this paper conducts an in-depth study on the earnings management behavior of ST Pang Da by consulting and sorting out relevant theories and literature of earnings management,and combining with the business situation before and after the risk warning treatment of the company being delisted,and draws relevant enlightenment for the problems arising from earnings management.In this paper,earnings management and other related theories and earnings management behavior analysis and impact of listed companies in China are summarized at first,and then the earnings management behavior of enterprises is identified by studying the operating conditions of ST Pang Da from 2017 to 2019.In order to avoid delisting risk,ST Pang Da uses asset restructuring,debt restructuring and other ways to carry out earnings management.Although ST Pang da completed debt restructuring in 2019 and achieved net profit turnaround,the problems in enterprise operation and management have not been solved because the earnings generated by earnings management are not sustainable.At the same time,the stock price continues to fall,the enterprise is facing greater operating risks.Based on the analysis of ST Pang Da earnings management motive,means and effects,and improvement measures are put forward from the perspective of the company,the hope to help the company to re-examine the effects of earnings management,actively improve their own management development situation,rather than by means of earnings management problem,which can ensure the effective operation of capital market.