MBA毕业论文英文版II

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1、 1.封面 分类号：（空缺） 密级：（空缺） UDC 编号：004002130   硕士学位论文 Accounting Policy Choices of Guangzhou Pearl River Industry 学位申请人： XXXXX 导师姓名及职称： XXXXXX 专业名称： IMBA May 24, 2001 ABSTRACT The choice of accounting

2、 policy is one of the main topics in accountancy theory study as well as the financial management practice. The following paper delivers my research result about the choices of Guangzhou Pearl River Industrial Development Co. LTD, one of the public companies in China property industry. The case goes

3、 into two parts: introduction of the background information and analysis about the motivation and effect of any specific choice by the company. Comparing the significant change of Pearl River’s financial data caused by different accounting policy choices, it is clear to see the huge influence of o

4、ne company’s accounting policy choices strategy, especially under the condition of China’s security market. Along with the improvement of regulation capability of Chinese government, however, the space for earnings management or financial cheating through illegal accounting policy choices will be li

5、mited. Companies in China will pay more attention in selecting the suitable accounting policy to correctly reflect their actual financial status and operation result in future. Key words: Guangzhou Pearl River Industrial Development Co. LTD, Public Company in Property Industry, Accounting Policy

6、Choice ACKNOWLEGEMENTS I wish to thank Mr. Lixin Wang at Lingnan College, Zhongshan University for its helpful suggestions and advices. I am also very grateful to Mr. Wei Duan and Miss Serena Shen at Guangzhou Securities Co., LTD for assistance with information collection, and to Mr. Zhen Li

7、and Mr. Antonio Huang for their help and assistance throughout this project. CONTENTS ABSTRACT Ⅰ ACKNOWLEDGMENTS Ⅱ CONTENTS Ⅲ Chapter 1 Research about Accounting Policy Choice 1 1.1 Definition and Contents of Accounting Policy 1 1.2 Development of Study about Accounting Policy 2 1.3 Chines

8、e Companies’ Choice 3 Chapter 2 Development of Pearl River Industry 5 2.1 History 5 2.2 Current Condition 6 Chapter 3 Analysis for Pearl River Industry’s Accounting policy Choice 10 3.1 Premises for Analysis 10 3.2 Analysis for the Accounting policy Choices of Pearl River Industry 13 3.3 Comp

9、arison of Pearl River Industry and Vanke’s Accounting Policy Choice 30 Chapter 4 Choices Evaluation 33 4.1 Characteristics of Pearl River Industry’s Accountancy Policy Choices 33 4.2 Adjustment 36 NOTES 43 REFERENCE LIST 44 APPENDIX 45 Chapter 1 Research about Accounting Policy Choice 1.

10、1 Definition and Contents of Accounting Policy There are still disagreements about the definition of accounting policy up to now. From the aspect of academic study, accounting policy has macro and micro two degrees. The space for a nation or a region’s choice is so- called macro-accounting policy,

11、which usually takes the form of relevant laws and the accounting standard. The micro-accounting policy is the choices about the specific principle, method and procedure within the scope of relevant laws with accounting standard accounting by the stakeholders of one enterprise. The following thesis i

12、ntends to study the accounting policy choice issue from the micro-aspect. Definition of the accounting policy is provided by several authoritative institutions as follows: IASC (International Accounting Standard Committee) defines accounting policy in its No.1 international accounting standard “P

13、resentation of Financial Statement”. Its definition is “particular principle, standard, method and process adopted by specific entity for its accounting recording and reporting of financial statements.” International Accounting Standards Committee: IAS 1, Presentation of Financial Statements, Revise

14、d 1997, Para. 21 The United States accounting principle committee gives the definition in its APB Opinion No. 22, which is the “method or procedures used in accounting for events reported in the financial statements.” In China, the accounting policy is the particular principle and method for acc

15、ounting activities according the definition in “Accounting Principle — Accounting Policy, Accounting Estimation Change and Modification for Accounting Error ” Finance Bureau No. 7 Notice in 2001 From above definitions, it’s clear that the accounting policy is the choices about the accounting pri

16、nciple and method by management in order to serve for the collection and providing of public financial information. The purpose of financial accounting is to provide valuable information to the outside stakeholders. Since different policy will affect the information delivered significantly, the mana

17、gement usually utilizes the authority of accounting policy choices to affect the decision making of stakeholders in order to maximize their benefits. Under the accounting system with accounting principles as a core, each accounting principle only gives the fundamental and restrictive requirements an

18、d describes about accounting method and step. So the management has a larger authority to choose its suitable accounting policy, and consequently control its reporting financial situation and operating result. All these public information will finally affect the stakeholders’ benefit through their i

19、nvestment decision. It’s very difficult to define all contents of the accounting policy, although some accountancy standard institutions have listed several important accounting policies. Because the importance of one policy is based on its influence on the disclosure of financial status, which usu

20、ally is affected by one company’s specific operation environment, market condition and other related background situation, it’s easy to vary and has no stable quality standard. Generally, the accounting policy about cost record, inventory, depreciation and others that significantly influence the rep

21、orting financial data are regarded as important policies. 1.2 Development of Study about Accounting Policy Accounting policy choice is one of the major topics in financial theory as well as capital market efficiency study. Since 1940s, it’s been the core direction of demonstration study in acc

22、ounting. 1.2.1 Traditional Opinion: Conservatism The traditional opinion is that the management follows conservatism for its accounting policy choice. Conservatism implies selecting methods that minimize asset totals and cumulative reported earnings. That is company should recognize expenses a

23、s quickly as possible and postpone the recognition of revenues as long as possible. The traditional opinion assumes that the management’s objective of policy choice is to reduce the possibility of unwarranted optimism by financial statements user. So, the management would like to choose a moderate p

24、olicy to lower system and unsystematic risk. 1.2.2 Income Smoothing Early organization behavior theory suggests that the maximization of profit is the target of a business organization. Therefore, firms’ accounting objective is the maximization reporting earnings in occurred period. However, in 19

25、53, accounting scholars find that the management usually takes the equilibrium of reporting earnings over time as its accounting target, which means it has incentive to smooth income through accounting policy choice. Empirical research has shown a relation between changes in stock prices and change

26、s in earnings, Advocates of income smoothing suggest that if a firm minimizes fluctuations in earnings, it will reduce the perceived risk of investing in its shares of stock, and all else being equal, obtain a higher stock price. 1.2.3 Empirical Opinion: Equilibrium of Political and Economical Act

27、ivities The most popular opinion about accounting policy choice is based on the assumption about Nash Equilibrium of organizational behavior. Empirical research has shown the target of business organization is the equilibrious result of relative interest groups including the management, shareholde

28、r, government, public and all the stakeholders, rather than the maximization of profit or income smoothing. Since each interest group want to select the favored accounting policy for themselves, the process of accounting policy choice is very complicated. 1.3 Chinese Companies’ Choice In China, t

29、he study about accounting policy choice is a new topic in financial field. But it has been developing fast during the past ten years, especially after 1995. Connected with the booming of security market, accounting policy choice attracts more and more attention from accounting regulation designer, s

30、cholar and accountant. Due to new accounting system reformation and closer cooperation between China with the world, Chinese companies also have a strong demanding for the related guide and consultancy. Although having got some accomplishments from both academic and practice aspects, regretfully, t

31、he relative study is not deep enough until now. Academic study more focuses on the macro-factors of choice objective while accountants only discuss the detail accounting method and process for specific account. Very few analyses are combined with company’s strategy and industry’s special characters.

32、 Actually, there is still no mature case study about this issue. In comparison with the fast development of strategy study, study about accounting policy choice is falling behind market’s need. As an important part of financial strategy, accounting policy choices significantly influence the final re

33、ach of one company’s whole strategy. So it’s urgent for Chinese companies to improve their choice quality. 1.3.1 Relative Regulations In the period of planned economy, relative regulations gives detailed requirements about accounting method and process. There is nearly no space for company to choo

34、se its special policy. Then, along with the accounting system reformation, the authority for company’s policy choice is larger step by step. Accounting policy choice comes into a more free and flexible period in China. Considering the management has a strong motivation to control earnings, a larger

35、 choosing space of accounting policy possibly cause a active distorting to actual financial information, which will mislead the investor’s decision making and finally hurt the interests of financial information users. To avoid the above activities and make sure the reporting financial data can corre

36、ctly reflect the actual results of company’s activities, government has implemented several laws and regulations related to accounting policy choice. “Accounting Law” (revised recently) claims that the following activities in accounting are forbidden. 1, Random change the recognition standard and

37、method for asset, liability and equity. Overvalue or undervalue asset, liability and equity. 2, accelerate or defer recognition of revenue. 3, Random change the recognition standard and method for expenditure and cost. Overvalue or undervalue expenditure and cost. 4, Random modify the calculation an

38、d allocation method. 5, Other activities of breaking relative law and regulation. “Accounting Principle — Accounting Policy, Accounting Estimation Change and Modification for Accounting Error ” claims in its 4th term that once an accounting policy is adopted, it’s not permit to be changed random.

39、 In its 5th term, it claims that any modification about accounting policy should satisfy one of the following criteria. 1, Modification is required by law or regulation. 2, Modification can lead to a better reflection of present financial situation, operating result and cash flows. 1.3.2 Practice

40、Along with the development of security market, accounting policy choice has a more significant influence to company’s performance in both commodity market and capital market. Facing the accounting system reformation, which provides a larger stage for policy choosing, more and more companies begin to

41、 pay attention to this issue. Study about property right and the practice experiences show that the ownership structure has an important effect to company’s accounting policy choice. For the purpose of taxation, financing and performance valuation, companies with different ownership structure diff

42、er a lot in their accounting policy choices. At present, Chinese company’s accounting policy choice is immature and lack of the successful cooperation with its whole strategy. This partly is the result of continuous accounting system reformation. Majority of accountants are not similar with the n

43、ew system and have little experiences in practices. Since they are used to the lesser accounting flexibility before reform, facing the larger choosing space, they don’t know how to utilize their authority. Considering accounting policy has significant influence on the arrangement of economical resou

44、rces, any unsuitable or incorrect accounting policy choice will finally hurt company’s long-term development. Anther common problem about accounting policy choice is that company especial list company still not full understands the criteria and requirement to policy choice. They usually overvalue t

45、heir authority in choice and in related estimation, and ignore the limitation to the random change. Empirical research shows that it’s popular for list company to manage their reporting earnings by using accounting discretion. In order to satisfy the requirement to reissue stock or to avoid loss cau

46、sed by stopping free stock exchange, some list companies manipulate their reporting financial data by overstating revenues and understating expenses, or some random change their recognition standard and estimation about operating risk. Chapter 2 Development of Pearl River Industry 2.1 History Pe

47、arl River Industry (stock code 600684), whose full name is Guangzhou Pearl River Industrial Development Co., LTD, is founded in the April of 1985. The company operates in the industries such as the development of real-estate, sale and lease of house and residential department management. In the earl

48、y period of its operation, Pearl River Industry performed excellently with the help of Guangzhou Government. In 1987, the company is assessed to be the first class real- Estate company and it accepted the honor of “Excellent Enterprise of Guangdong Province" in 1990. In the same year, Pearl River In

49、dustry is awarded the title of “Excellent Real- estate Enterprise of China" as well. To improve the competitive capability in China's economical reform, Pearl River Industry began to issue stock in 1993. The offering amount is 22,500,000 shares at that time, and Guangzhou Pearl River Industry Grou

50、p Limited Co. and Guangzhou State Capital Management Bureau are the big investors holding 39.62% and 6.89% share respectively. In the October of that year, Pearl River Industry became the listed company in the Shanghai Security Exchange. Pearl River Industry now owns two sub-companies, Guangzhou Qia

51、oxing Property Co., LTD and Guangzhou Pearl River Property Management Co., LTD. Pearl River Industry has successively developed several residential houses, high- class departments, hotels, offices and other commercial buildings since it's founded. The name list includes White Swan Hotel, China Hot

52、el, Garden Hotel, Taojin Bei House projects and so on. The building of World Trade Center in the early of 1990s had leaded the fashion of Guangzhou office construction. The total area developed by the company has exceeded 1.2 million square meters until now. And Pearl River Industry is called the “

53、greatest stated- owned crocodile" with other two real- estate companies in Guangzhou City。 The fierce competition in property industry increases the pressure and risk of Pearl River Industry's operation. Under such situation, the company designed the strategy of “consolidating real- estate industry

54、 while seeking for other investment opportunity, basing upon Guangzhou while expanding in other region". Pearl River Industry cooperated with the foreign company to establish four join ventured enterprises and developed Overseas Chinese Garden, All Thing Best Garden, Guanglong Building and All Thing

55、 Best City four projects respectively. To expand the oversea market, Pearl River industry cooperated with Hong Kong Zhongxing Group in the sale and lease of commercial house. At the same time, the company invested 15.56 million in several real-estate companies in Zhuhai, Fuzhou, Chongqing and Shangh

56、ai to prepare for the expanding in other cities. 2.2 Current Condition Along with the recover of the macro economical situation in China, the real-estate industry went into a period of development in recent years. Due to the successful application for Olympic Game, the entrance into the WTO and t

57、he improvement of property finance system, the individual demanding for commercial house is expanding rapidly, and consequently the local market with central city such as Beijing and Shanghai is growing up with above supports. In the spring season of real-estate industry after a long-time winter, th

58、e amount of real-estate companies enlarged quickly. In 1986, China has about 3000 real-estate companies, which have expanded to more than 25600 until 2001. All these companies including Pearl River Industry is competing and contributing in a continuously expanding market. Pear River Industry focus

59、es its business in Guangzhou urban region. Comparing to other city in China, Guangzhou’s property market begins to develop much earlier and is more mature. The supply and demand quantity of Guangzhou for commercial house is far larger than majority cities in China. Since the local government began t

60、o regard the real-estate industry as one of the core industries for economical development, Guangzhou’s property companies benefit from the town redesigning, rebuilding and other huge governmental property projects. From 1999 on, real-estate industry in Guangzhou has come into a continuous expanding

61、 period with more than 10% increasing in investment and construction area each year. However, since the competition in this industry gets much fiercer at the same time, the total supply still exceeds the total demand and the average price goes down a little under the pressure of rising hose stock.

62、As one of the first movers of Guangzhou property industry, Pearl River Industry took advantage of its brand effect in the early 1990s and had once accomplished outstanding achievements. In 1994, the company achieved the honor of “Most Advanced Property Enterprise in Year 1993”. Since then, unfortuna

63、tely, Pearl River Industry has been suffering its inflexible and irrational investing system. When the whole industry turned to decline, the company wasted time and money in some failed investments, and consequently lost its competitive advantage (Figure 2-1). Figure 2-1 Pearl River Industry’ Per

64、formance (1997—2001) In recent years, performance of Pearl River Industry got even much worse and unstable. In 1999, though other real-estate companies benefited from the booming demand cause by the finish of old house arrangement policy, Pearl River Industry only realized 6.72 million incomes, and

65、 nearly got a negative profit without the investment gain. The company’s revenue rose greatly in 2000, but still not recovered to the level of 1998. According to the request of government, Pearl River Industry raised its allowance for uncollectible accounts and inventory loss, which caused administ

66、ration expenses to rise 577%. Meanwhile, the financial expense rose 1656% for the finish of interest capitalization. As a result, the company faced a loss of 102.04 million for the first time. Without considering the affect of irregular issue, for example the loss caused by the change of accounting policy, Pearl River Industry lost 0.13 per share in 2000. In the year of 2001, Pearl River Industry’s financial data seemed improved, the net profit turned to positive (Table 2-1). Table 2-1 The Ma