Research On Earnings Management Behavior In Convertible Debt Financing

Convertible bonds,as a kind of financial instrument,have the three attributes of bonds,stocks and options,which enrich the investors’ choice and are a good financing method for enterprises.In recent years,under the continuous optimization of securities regulatory authorities,listed companies are no longer only interested in targeted rights issue,rights issue and other refinancing activities,and more and more listed companies are attracted to convertible bonds supported by the policy.However,due to the asymmetry of capital market information,enterprises will try to raise capital income through surplus management.Investors who are in the position of information disadvantage are easily misled by excessive surplus management operations and make wrong decisions.Over time,this will affect the performance of enterprises in the future.Therefore,the surplus management behavior in convertible debt financing has gradually attracted the attention of the market.This paper studies the earnings management behavior in convertible debt financing of listed companies through case analysis.Firstly,the paper analyzes the possibility of earnings management in convertible debt financing by combining the research results of refinancing and earnings management.Then we choose the very storytelling Lance debt conversion as a case to further analyze,identify and measure its earnings management behavior,and analyze its earnings management motivation and means before and after the issue and before the stock conversion.Finally,the economic consequences are analyzed from two aspects:corporate performance and investor interest.After research and analysis,this paper finds that Lens technology has obvious surplus management during the issue of convertible bonds and during the transfer of shares,mainly through the change of accounting estimates and government subsidies to achieve the purpose of surplus management,and through non-recurrent profit and loss and cost control to achieve the purpose of stimulating investors to transfer shares.From the perspective of the economic consequences of Lens technology surplus management,although the purpose of issuing and transferring shares of the company has been achieved,the operating risks caused by earnings management inversion can not be ignored,and the damage caused to investors’ interests deserves more attention.In this paper,we need to standardize the disclosure of information of issuing companies,pay attention to the reasonableness of the downward revision of the price of convertible bonds and the threshold of financial access to the diversified convertible bond financing market.This paper makes up for the deficiency in the detail of earnings management of convertible bonds and the related research on the convertible bond market through case study.At the same time,this research can also provide reference for the supervisory authorities to guard against the risk of convertible bond market,enterprise compliance operation and investors to invest cautiously.