Research On The Impact Of New Leasing Standards On Earnings Management Of Retail Enterprises

Under the "dichotomy" model of the original leasing standard,the lessee can use operating lease for earnings management,which has been questioned by the theoretical and practical circles,and the new leasing standard came into being.China’s Ministry of Finance issued the accounting standards for Business Enterprises No.21-leasing(cas21)on December 7,2018,and stipulated that the initial application time of most enterprises is January 1,2021.Compared with the original standards,the core change of the new leasing standards is to cancel the lessee’s different treatment of financial leasing and operating leasing business in the statements,and uniformly recognize the right to use assets and lease liabilities.Whether the newly revised leasing standards can achieve the expected goal and effectively inhibit and reduce the earnings management behavior of enterprises is worth discussing.Therefore,this paper selects the case study of Xinhua Department store,a retail enterprise that leases a large number of stores,warehouses and other business places by means of operating lease.Firstly,this paper analyzes the internal and external environment faced by the case company,and finds that Xinhua Department store has the motivation of earnings management,and it does have the opportunity to achieve the expected purpose through some ways under the original leasing standards.For example,operating lease can realize off balance sheet financing and reduce financial leverage,so as to enhance the external financing ability of enterprises;It can confirm expenses evenly and smooth enterprise profits,so as to ensure the relative stability of managers’ positions.However,the new leasing standard inhibits the earnings management behavior of enterprises through two ways: first,its negative financial impact reduces the willingness and possibility of earnings management of Xinhua Department Store;Second,higher reporting and disclosure requirements increase the risk of earnings management of Xinhua Department store.From the impact content,the new leasing standards reduce the possibility of subjective judgment and free choice of enterprises,and compress the space of earnings management of Xinhua Department store.After the new standards began to be used,the author found that Xinhua Department Store chose other ways of earnings management,such as self construction rather than operating lease,changing other accounting policies and so on.Based on the above analysis,this paper concludes that the new leasing standards regulate and restrict the earnings management behavior of enterprises to a certain extent.In addition,this paper compares the changes of the old and new leasing standards in accounting treatment,presentation and disclosure,and analyzes the reasons for the revision of leasing standards,so as to provide theoretical support for the case analysis part.Finally,in order to better deal with the reform of leasing standards,this paper puts forward corresponding countermeasures and suggestions for retail enterprises from three aspects:financing,operation,accounting and financial treatment.