Research On Earnings Management Based On Performance Commitment

Through mergers and acquisitions,enterprises choose new ways to adapt to market changes and enhance competitiveness.In M & A transactions,there is information asymmetry between the parties,which will lead to transaction inequality.Therefore,performance commitment has become the most favorable means to reduce risk.In this case,some companies are unable to fulfill their commitments on time due to the signing of high performance commitments.In order to avoid the trigger of performance pay,they will take a series of earnings management measures.Avoid the risk of insufficient information,capital withdrawal,stock price decline,goodwill storm and other risks caused by the failure of the performance commitment party to achieve the promised performance after high valuation merger;The acquirer usually participates in the profit management of the enterprise,but this practice may damage the interests of investors and have a negative impact on the stability of the capital market.Therefore,it is of great significance to identify and study earnings management under performance commit.This paper takes the acquisition of Y company by T company as an example,applies the basic theory to the acquisition case,and analyzes the revenue management behavior of both parties in the acquisition activities.First of all,this paper expounds the theory of information asymmetry,and leads to the causes of earnings management.Secondly,through the analysis of various earnings management measurement models,it is found that in this case,the most suitable model is the modified Jones model considering accounts receivable.Using this model to judge the degree of earnings management of T company,it is found that the degree of earnings management of T company is higher.Then,through further financial analysis,this paper finds that Y company has increased profits through virtual reality transactions,that is,bill exchange behavior;Increase profits by adjusting inventory depreciation reserves,R&D investment capitalization rate,accounts receivable,government subsidies,etc;At the same time,it is found that the M&A of T company has produced a large amount of consolidated goodwill.After the performance commitment period,there has been a "storm" of goodwill.This is the revenue management measure adopted by both parties.The party performing the performance commitment.Finally,on the basis of the above analysis,this paper puts forward feasible suggestions to improve the performance commitment performance quality from the aspects of evaluation methods,strengthening supervision,information disclosure and intermediary.