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Means of earnings management of listed companies in China and case studies

Author: SunPing¡¡ZhangMin From: www.yourpaper.net Posted: 2009-10-27 19:11:24 Read:
Summary: listed company earnings management, the use of the space left by the accounting policies to manage earnings, to a large extent reduce the surplus of the reliability of the information, making it impossible to objectively and fairly reflect the financial position and operating results of the enterprise. Using the accounting policies, impairment of assets, asset restructuring, the debt restructuring is the primary means of many losses of listed companies to manage earnings.
Keywords: earnings management; assets for impairment; asset restructuring; Chinese listed companies

Listed company earnings management, the use of the space left by the accounting policies to manage earnings, largely reduce the surplus of the reliability of the information, making it impossible to objectively and fairly reflect the financial position and operating results of the enterprise. Using the accounting policies, impairment of assets, asset restructuring, the debt restructuring is the primary means of many losses of listed companies to manage earnings.

First, the use of the provision for impairment adjustment surplus

In recent years, eight asset impairment provision has been favored by listed companies, the main reason is that the proportion and amount of the provision related to the profitability of the enterprise, and may even reverse its trend. Under normal circumstances, some of the listed companies in the performance is poor less allowances can "polish" performance, while others are prepared to provide more better-run, "performance reserve" in order to do a good job for the subsequent accounting period, resulting in eight meter mentioning its "flexibility" and "arbitrary" as many listed companies arbitrary means of earnings management. Of course, the new accounting standard requires that an impairment loss has been established, it shall not be reversed in subsequent accounting periods. Assets that can be reversed only formed by accounts receivable, inventory, consumable biological assets, construction contract assets, deferred income tax assets and finance lease lessor unguaranteed residual value of such assets, the subsequent measurement of the fair value of investments real estate and mineral interests in unproved. Provision for impairment of huge assets the deficit enough time, lay the foundation for future year huge punch back, to achieve security card, Zhaimao, to achieve the purpose of profit for the year. According to statistics, as of February 22, 2006, the Shanghai and Shenzhen A total of 13 ST, * ST companies disclosed in the 2005 Annual Report, including the the individual has Uncap company and has suspended the listing company. 13 companies, nine in 2005 to achieve profitability, a continued profitability of the three losses. The report shows that, Although most of these companies are profitable, but the main business and financial position of a few fundamental improvement in most companies is the use of the asset impairment provision and turn back to manipulate profits, seriously affecting the quality of the accounting information .
Case, the "face" of the results of Datang Telecom (600198), April 5, 2007, released an announcement, said the 2006 report on its performance loss. In accordance with the relevant provisions of the 2004 and 2005 results have been consecutive losses, Datang Telecom will soon be delisting risks (ie dubbed * ST). In this regard, Datang Telecom announced on April 5 this interpretation, "the company despite the size of the main business of the 2006 and the main business profitability substantially increase, but retained a large number of assets with a view of the wireless, optical communications, and other traditional communications equipment industry over the years operating limited capacity to expected gains, significant impairment provision needed on the integration of wireless and optical communication assets, which will lead to a result of the loss of 2006. "insiders, Datang Telecom impairment provision originally allocated to the next few years, but now management hopes once it stalls out. Datang Telecom had announced in 2006 three performance reports are all for profit: a quarterly, semi-annual report and three quarterly net profit of 817 million, 2,208 million and 2,761 million. Some commentators have suggested, in order to be pushing for the accelerated restructuring of Datang Telecom Group; commentators have suggested that Datang Telecom Group deliberately "sign of weakness", in order to put pressure on the relevant state departments, was greater care and support.

Second, the use of the asset restructuring to adjust

The asset restructuring enterprises in order to optimize the asset structure, the completion of the industry restructuring and the implementation of the strategic shift, the purpose of the implementation of the replacement of assets or equity transfer behavior. Means of asset restructuring of listed companies use to manage earnings: the transfer of shares, replacement of assets, transfer of foreign assets, foreign mergers and acquisitions. Transfer and disposal of assets, including the transfer and disposal of fixed assets, intangible assets, long-term investment, short-term investments, equity investments, construction in progress and other current assets. Listed company through the transfer and disposal of assets, transfer of non-performing assets to the holding subsidiaries; Alternatively, the parent of listed companies cheap to acquire high quality assets and non-interest finance charges. Through this form, a listed company on the one hand can not pay any consideration of quality assets of the parent company's right to use; the one hand, you can avoid operating losses generated by the non-performing assets or loss. In 2007, 48 corporate reorganization of assets, and another 48 are revoked * ST 21 through the reorganization of assets in 2007, a variety of ways to achieve "Reaching for the Stars" Uncap.
Cases, Zhejiang Orient (600,120) in 2004 profits 19 1,436,000 yuan, net profit of 10,201 million normal operating profit of 5,339 million, of which, disposal of assets to generate income 2,368,700 yuan, accounting for 31.7% of the company's net profit . ROE in the years of 2002, 2003 and 2004, respectively, 13.59%, 10.29%, 10.34%, and consecutive three-year average return on equity above 10%, the successful placement of shares in 2004.
Case, ST Huandao (000,691) replacement and related party assets and equity transfer, "Reaching for the Stars" in 2007, a series of mergers and acquisitions, divestitures, asset sales and equity transfer assets reorganization optimize assets, increase profits, she appeared in the 2007 mid-year report net profit of 7,250,500 yuan span turnaround, no doubt is the contribution of the asset restructuring.
Case, Oriental Silver Star (600,753) through asset replacement in 2006, will be rewritten as the positive net profit 2,253,100 yuan, and later through divestitures, asset restructuring in the first half of 2007 net profit of 6,359,900 yuan smooth "Uncap. Third, the use of debt restructuring to adjust

The debt restructuring is the case of financial difficulties of the debtor, creditors make concessions on matters in accordance with the agreement reached with the debtor or court ruled. Debt restructuring as an important means to resolve debt disputes, more and more enterprises are using. Debt restructuring has an important role to reduce the burden on enterprises, optimize the capital structure, and re-energize the vitality of enterprises. Due to the debt restructuring process will generate a gain on debt restructuring, so some of the poor performance of listed companies will take advantage of the debt restructuring to manage earnings. 2007 annual report that 115 listed companies achieved a gain on debt restructuring, profit for the period increased by an average of 1.35 million yuan. In fact, these listed companies an average of 23.9% of the current pre-tax profit from the gain on debt restructuring. ST company, is undoubtedly the biggest beneficiary. Statistics 115 gain on debt restructuring of listed companies, ST 43; 66 gain on debt restructuring of listed companies in more than 500,000 yuan, ST 33; 20 large companies in the gain on debt restructuring 14 ST companies; gains billions of dollars of debt restructuring three companies are ST. This indicates that the ST commonly used as a means to improve the performance of the current debt restructuring.
Case, ST Yu-source (000408) through debt restructuring has been a net loss in 2005 9 7.1567 million yuan rewrite the 2006 net profit of 0,698,900 yuan, thus the net profit in the first half of 2007, a report not just restructuring after profit growth as obvious, but also the gratifying situation as much as 5.9583 million yuan, and these are to lay the groundwork for the end of 2007 to achieve Uncap.
Case, S * ST Zarva (000655), the company in 2004, 2005 and 2006, three consecutive years of losses, according to the Shenzhen Stock Exchange Listing Rules provides that, on May 23, 2007, in the face suspension of listing serious debt crisis, December 21, 2007 Zarva Group company managers since the beginning of the implementation of the draft reorganization plan. Debt restructuring completed by the end of 2007, April 25, 2008, the Company announced the 2007 Annual Report, only gains or losses from debt restructuring, debt restructuring gave the company 992 million yuan, the successful turnaround of the company on May 5, 2008 the Shenzhen Stock Exchange to submit the application for relisting avoid delisting doom. In 2007, net profit attributable to equity holders of 1.069 billion yuan, net profit attributable to ordinary shareholders -11.44 billion after deducting non-recurring gains and losses. Be seen what the new debt restructuring guidelines to save the fate of the listed companies.
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