Research On Earnings Management Behavior And Consequences Of HM Automobile Company

Under the influence of ST system,many enterprises with poor operating conditions are facing great pressure to maintain the market.Some of them can not turn losses into profits in the short term.In order to avoid delisting,they often implement earnings management.Although these enterprises have achieved financial profits in the short term,their future development has also been greatly negatively affected,and investors will also suffer corresponding interest losses.In the long run,it will affect the healthy development of the securities market.At present,the research on earnings management mostly focuses on empirical research.Therefore,this paper selects HM automobile company as a case to analyze its earnings management behavior and consequences,in order to enrich the results of earnings management case research.Firstly,it expounds the research background and significance of this paper,the literature research results at home and abroad,as well as the concept definition and theoretical basis of earnings management.Then,it gives an overview of HM’s overall earnings management process and its main concerns.Then it uses the total profit accrual model,modified Jones model and non recurring profit and loss change trend analysis method to identify its earnings management behavior.In terms of earnings management means,it lists four ways of using non recurring profit and loss,asset impairment loss,abnormal reduction of period expenses and related party transactions,and presents the consequences of earnings management based on the changes of various financial indicators and market response.Finally,starting from the case,this paper gives some suggestions on restraining enterprise earnings management from three aspects: improving accounting standards,reasonably planning delisting mechanism and strengthening external supervision.Through the research of the full text,the following conclusions are drawn:1.HM automobile used various means to carry out earnings management from2017 to 2019.Specifically,it includes the use of non recurring profits and losses,related party transactions,asset impairment and substantial reduction of period expenses.2.Earnings management can not improve the profitability of enterprises.Although carrying out earnings management can help enterprises turn losses into profits in a short time,its profit composition is often dominated by non recurring profits and losses,which is not sustainable;The recovery of various profit indicators brought about by the implementation of earnings management in the current year will face a greater decline in the next fiscal year.3.Earnings management behavior will have a huge negative impact on the future operation of the enterprise.The study found that in the first accounting period after HM automobile carried out earnings management,many financial indicators fell to the lowest point in recent years;After the implementation of earnings management,the cumulative excess return of HM automobile stock is negative and the market reaction is negative.Through the full text analysis,this paper aims to reveal the negative effects of earnings management and warn enterprises to avoid excessive earnings management;At the same time,it analyzes a variety of earnings management means of case enterprises to help investors identify earnings management behavior;Finally,through the study of case enterprises,it is expected to provide reasonable suggestions for external supervision,which can more comprehensively supervise and inhibit the behavior of enterprise earnings management.