Research On Earnings Management Behavior By Using Goodwill Impairment

In recent years,performance commitments,as an important system to ensure the realization of expected returns,have played an important role in corporate mergers and acquisitions and restructuring transactions,supporting the development of mergers and acquisitions in my country’s A-share market.However,while the performance commitment system protects the income of listed companies,it has also become a breeding ground for issues such as benefit transfer,insider trading,and earnings management.In particular,high premium mergers and acquisitions caused by performance commitments have allowed a huge reduction in goodwill overnight.Value,leading to a sharp drop in stock prices,causing stakeholders to suffer huge losses.This article takes Dayang Motor’s acquisition of Shanghai Electric Drive as an example.From the perspective of performance commitment,this article explores the relationship between the huge impairment of goodwill and earnings management that Dayang Motor has accrued after the acquisition of Shanghai Electric Drive,and analyzes it from three different perspectives.The reasons for the huge impairment of M&A goodwill are analyzed.Through the study of this case,it is found that the performance commitment in mergers and acquisitions is one of the important means to support high pricing,thereby forming high goodwill.The high amount of goodwill gives managers more room for earnings management.In the case,Dayang Electric used high performance commitments and actively seeking synergy to support the high valuation of the acquired company,resulting in huge goodwill,and because the performance commitments could not meet the standards,and the use of impairment testing method,only for the business Whether the reputation is impaired is tested,but it is not amortized,which leads to a huge impairment of goodwill,which makes profits fall to the end.As far as earnings management is concerned,corporate management uses the fluctuations of the standards and subjective judgments,does not fully disclose related matters,and uses equity pledges to cash out and other methods for earnings management.Therefore,after analyzing the reasons for the performance commitments and the huge impairment of goodwill made in the process of mergers and acquisitions,this article proposes to rationally treat such performance commitments and synergies similar to Dayang Motor,pay attention to improving the initial measurement of mergers and acquisitions goodwill,and accurately predict Evaluate the fair value of the identifiable net assets of the acquired company,improve the subsequent impairment measurement of goodwill due to mergers and acquisitions,try to reduce the floating space of the goodwill impairment method,and use the auxiliary system amortization method to test the impairment,and strengthen the accounting practice The professional competence of personnel;and at the level of earnings management,internal control systems must be strengthened to effectively supervise the management.External regulators must also increase supervision and increase the upper limit of penalties to ensure that relevant information on goodwill generated during the merger and acquisition process can be obtained.