A Study on the Relationship between Capital Reduction, Firm’s Performance, and Earnings Management

• Main Authors: Jing-Shiang Shiu, 許景翔
• Other Authors: Shaio-Yan Huang
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/m662wc

碩士 === 靜宜大學 === 會計學系研究所 === 97 === After 2000, the cases of capital reduction were 10 times than the past decade. Unlike reduction for recovering losses, many companies handle the cash reduction of capital by promoting the shareholder’s equity, the earnings per share and return on investment for reason. These companies always achieve the goal of promoting return on assets, but half companies’ ROA dropped off next year. Jensen(1976) indicated the agency problems caused by the benefits conflict between owners and managers, then the managers would do earnings management through discretionary accruals. This study use the company which had ever adopt handle the capital reduction between 2000 and 2007 as research samples to investigate the association between capital reduction, firm’s performance and earnings management. The empirical result indicates that companies reduction capital do really has better operating performance, but also has earnings management movement. Besides, this study also indicate those companies have the tendency to use earnings management to improve accounting performance. Unfortunately, the result is indifferent in classifying capital reduction into capital reduction through distributing cash to shareholders and capital reduction for recovering losses.