Research On Goodwill Impairment And Earnings Management Behavior Of A Company

Since 2018,listed companies have frequently accrued huge goodwill impairment losses in the capital market,resulting in performance thunderstorms.Goodwill impairment is often inseparable from earnings management behavior.The management often adopts earnings management means such as no provision,less provision or delayed provision of goodwill impairment losses,so as to whitewash profits or release losses in a centralized manner.In this context,this paper studies the goodwill impairment and earnings management behavior of listed companies,in order to sound the alarm for investors,and provide some suggestions for the supervision of China’s capital market and the improvement of goodwill standards.Based on the above background,this paper focuses on the goodwill impairment and earnings management behavior of company a by using the methods of case study,event study and data analysis,and draws the relevant conclusions as follows:(1)there is a high premium in the initial recognition of company a’s goodwill,and the problem of huge goodwill impairment is prominent in the one to two years after the expiration of performance commitment.The provision of goodwill impairment is greatly affected by the subjective influence of the management and deviates from its economic essence;(2)From the real earnings quality during and after the performance commitment period of company a,we can see that company a has earnings management behavior to a great extent;(3)The management of company a has strong earnings management motivation in the follow-up measurement and information disclosure of goodwill,including the motivation of "taking a big bath" and the motivation of reducing the holdings of major shareholders;(4)The long-term reaction of company a’s earnings management using goodwill impairment in the capital market is negative,which will have certain adverse consequences for the company’s own development and small and medium-sized investors.Finally,according to the conclusions of the study,this paper puts forward specific suggestions:(1)regulators should strengthen the supervision of high premium M &A transactions;(2)Relevant departments need to improve the accounting standards related to the subsequent measurement and information disclosure of goodwill;(3)Small and medium-sized investors should improve their awareness of risk prevention.