Research On The Economic Consequences Of Earnings Management Based On Non-Recurring Profit And Loss

In the process of constantly modifying the delisting system of listed companies in China’s securities market,many listed companies will pay more attention to their own earnings management,and will also pay more attention to non-recurring profit and loss items.Once earnings management begins to have a tendency to manipulate,it is likely to damage the interests of investors and affect the order of capital market operation.It can be seen from relevant literature that there are three ways of earnings management.Generally speaking,if an enterprise conducts earnings management through real activities,it will adopt such methods as asset disposal,related party transactions,and government subsidies.However,since non-recurring gains and losses can have a significant impact on the enterprise’s earnings,and because of its vague definition,Therefore,when an enterprise divides its own non-recurring profits and losses,it will be easy to make subjective judgments,and it is compliant from the perspective of accounting standards.The use of non-recurring profits and losses does not need to be listed in the financial statements,which changes the understanding and cognition of statement users on the financial statements,so as to achieve the purpose of earnings management.What is the motivation and means for enterprises to use non-recurring profit and loss for earnings management,what is the impact of enterprises,and what are the problems reflected by this behavior? This thesis mainly analyzes and summarizes these problems in the way of case analysis.This thesis selects Huamao as a case company to conduct a more detailed study.Huamao is a listed company that has successfully turned losses into profits by using non-recurring gains and losses for many consecutive years.By analyzing the specific means and behavioral motives of earnings management of listed companies,and through the event study method and indicator analysis method,the economic consequences of a series of earnings management activities of Huamao Shares show that they have a negative impact on the interests of investors,as well as on the financial performance and enterprise value of the enterprise itself.It also does more harm than good to the enterprise itself.Then it summarizes the problems reflected in its earnings management activities: weak profitability of its main business,the accouting standards and information disclosure system are imperfect,the regulatory rules of China’s capital market are imperfect,and puts forward corresponding improvement measures,which also provides relevant reference for China to formulate and improve relevant accounting standards,regulate the operation activities of listed companies and the operation order of the capital market.