A Study Of Earnings Management In The Process Of IPO

ABSTRACT:At present, the number of the listed companies is low. As a scarce resource, listing qualifications is worthy, so a large number of companies in China have a strong motivation to obtain listing in the IPO process. The results of the Commission on the company's IPO threshold requirements may make the company to enhance company performance by earnings management before the IPO process. The article notes that the company's major shareholders buying and selling with the company can significantly enhance the company's performance, helping the company obtain IPO qualifications. This paper examines the specific company and its controlling shareholder in the IPO year about the relationship between the performance of the company buying and selling, and the relationship between tunneling (non-payment of loans) and related transaction. The following three main ideas were found:First, IPO the company's performance was significantly dependent on the largest shareholder's related transaction.Second, the IPO market before the company failed to identify the associated sales achieved through earnings management. IPO sale of the company's price-earnings ratio and no significant association between, or even the relationship with non-related sales is not significant; indicating the effectiveness of China's securities market is still very low.Third, the major shareholder of the company before the IPO to give more support to the association purchase and sale of the company. But after the IPO shareholder funds of listed companies was tunneled more by the major shareholders.The contribution of this paper is that we fund the major shareholder's two faces in the company's IPO process. What major shareholders do before IPO is for the tunneling the benefits from the company. It's bad for the development of the Chinese companies.