| The Science and Technology Innovation board registration system is a milestone in the market-oriented reform of China’s capital market.It aims to strengthen the resource allocation function and improve efficiency of market,providing financing channels for small and medium-sized science and technology innovative enterprises.promoting the development of the real economy.After the setting of The Star Market in July 2019,the new listings had led to heated discussion among investors.However,in November 2019,the board suffered from a wave of "new stock breaking",with many stocks falling below the issue price within a short period of time,to the great disappointment of investors.This phenomenon has something to do with the earnings management of the issuer before IPO.The reason is that even though The STAR Market has relaxed initial public offering standards,it still set thresholds on the market value,revenue,cash flow,net assets and other indicators of the issuer.Issuers inevitably have strong earnings management motivation to meet listing standards.In addition,after the stock price falling below the issue price,the issuer will be questioned and pressured from all sides,which will affect the follow-up operation and financing of the enterprise.To boost investor confidence or to respond to the external environment,management may also manipulate profits and beautify statements.Therefore,it is of great significance to study the earnings management behavior before and after IPO of these enterprises.This paper adopts the case study method and selects Jiuri Xincai(JRXC)(stock code:688199.SH)as the study object.JRXC is the leading company with the most complete product line in the industry,and the market share of its main product is as high as 30%.However,it suffered an issue price break on the next day of its IPO,and then the stock price continued to fall against the trend of the market.In this paper,a brief introduction of IPO pricing efficiency related theories was followed by the literature review of the concept,motivation,influencing factors and methods related to the earnings management,as the theoretical basis for the subsequent case study.After the introduction of the case background about the general situation,IPO situation,operating condition and financial condition of JRXC,the paper analyzes the profit quality of the company before and after IPO by using two indexes:net cash ratio and revenue cash ratio,and finds that the profit quality of the company gradually decreases.On this basis,after analyzing the earnings management means that the company may take,it is found that the company has carried out positive earnings management through accrued and real earnings manipulation,in which the real earnings management takes a higher proportion and has a greater impact on earnings.The former one acts as the wrong classification of the income statement items,like G&A and non-operating expenses.The latter one is more variable,including the relaxation of sales credit policy,reduction of discretionary fixed costs,the arrangement of implicit related party transactions,the use of income tax incentives,and so on.The company implemented the new financial instrument standards in 2019.After being listed in November 2019,JRXC used part of the over-raised funds to invest in financial products,resulting in a large increase in investment assets.In order to understand whether the company used investment income to carry out earnings management after the revision of financial instrument standards,this paper researches the matching degree of the proportion of operating assets in the total assets and core profit margin,and analyzed the sustainability of investment income.As a result,it proved that the account of investment income was not used in earnings management.At the end of the paper,suggestions are proposed from the aspects of improving the issue system of The Star Market and perfecting the internal governance structure of the company.To be specific,it is suggested that regulators should guide issuers to do a good job of information disclosure,and enrich the forms of information disclosure to enhance the quality of accounting information.In addition,company should reinforce the supervision function of governance layer,design reasonable compensation incentive mechanism of the management to weaken the earnings management motivation of the management,and restrict the behavior of the earnings management. |
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