Study On Earnings Management Of LS Shares

Earnings management has been one of the hot topics in economic research since its birth,almost all enterprises in China’s capital market have some degree of earnings management.At the same time,China’s securities market implements a special treatment system,which gives special treatment to enterprises that do not meet the listing conditions.In recent years,excessive earnings management by some listed companies has caused serious adverse effects on enterprise operation and investors’ interests,and affected the healthy development of the economic market.After experiencing major business problems such as major shareholder misappropriation of huge funds and failure to fulfill performance commitments,LS shares suffered huge losses.After being specially treated by the stock exchange,LS shares accurately reached the performance standard in the third year and maintained the listing qualification,and then suffered huge losses in the fourth year.Based on this research background,this paper expounds the research purpose and significance of the paper.On the basis of sorting out the relevant research of domestic and foreign experts and scholars,this paper further clarifies the concept,influencing factors,behavior and other relevant theories of earnings management.From the perspective of earnings management behavior,this paper analyzes the motivation,identification,means and other aspects of earnings management of LS joint-stock company in combination with the financial reports issued by LS Joint-stock from 2017 to 2021.In terms of motivation,LS shares have fundraising motivation and market protection motivation;Secondly,the total accrual income method,modified Jones model and Roychowdhury model are used to analyze the financial data related to LS shares,and the degree of earnings management is analyzed by using relevant theories.Then it analyzes the changes of relevant data in its financial statements,analyzes and identifies the unreasonable places,and finds that it does have the behavior of earnings management such as controlling expenses,asset reorganization and abusing accounting estimates.Then,by comparing and analyzing the changes of financial ability before and after LS share earnings management,we find that LS share earnings management does not really improve the operating conditions of enterprises or even worse.To sum up,this paper analyzes the problems existing in the internal governance and external systems of LS Shares exposed by the successful implementation of earnings management,and gives corresponding suggestions from the internal and external systems of the company.For the company,it mainly includes: the enterprise should improve the perception of the policy,actively respond to the policy and make timely changes;Establishing an accountability and error correction mechanism to improve the risk management and control capabilities of enterprises;Strengthen the improvement of the internal control system,moderately reduce the concentration of equity to prevent the occurrence of power for personal gain and other damage to the long-term development of enterprises;Timely improve the operation and management of enterprises to maintain good competitiveness of enterprises.For external systems include: The first is to optimize the relevant system,and the second is to improve the supporting system,such as simplifying the market entry criteria,so that enterprises do not have the fear of listing.