Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing
Journal of Investment and Management
Volume 4, Issue 5, October 2015, Pages: 228-236
Received: Jul. 21, 2015; Accepted: Aug. 6, 2015; Published: Aug. 13, 2015
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Authors
Bai Yinghui, Xinglin School, Nantong University, Nantong, China
Xiong Yuanyuan, Bank of Jiangnan, Changzhou, China
Wang Binru, School of Business, Nantong University, Nantong, China
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Abstract
This paper investigates the action、the motivation and the character of earnings management in the process of IPO using a sample of 281 IPO firms in the Growing Enterprise Market(GEM) of A-share market of Shenzhen Stock Exchange during 2009~2011. First, the evidence result shows that these listed companies revise earnings upwards in the year of issuance, while revise earnings downwards in the first year of post-IPO. Second, there is a significant correlation between these listed companies’ initial offering prices and the level of earnings management which illustrate one of the motivations of earnings management is the high initial offering price, even though this correlation between them is weak. Third, the level of earnings management of those listed companies who belong to manufacturing industry is less than that of those listed companies who don’t belong to manufacturing industry in the year of issuance.
Keywords
Earnings Management, GEM, IPO, Initial Offering Price
To cite this article
Bai Yinghui, Xiong Yuanyuan, Wang Binru, Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing, Journal of Investment and Management. Vol. 4, No. 5, 2015, pp. 228-236. doi: 10.11648/j.jim.20150405.23
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