The Research On Earning Management By IPO Firms In SME Board

China Small and Medium Enterprise Board (SME Board) was launched in the Shenzhen Stock Market in June 2004. It takes the first step to constructing Chinese multi-level capital market. The SME Board, as the secondary board with china's feature, still faces many risks, earnings management is one of those.Earning management plays a rural role in the initial public offering process. The domestic and foreign companies both have the motivation and opportunities to manage earnings in order to go public and get more and more offering proceeds. In the short run, managers of the IPO firms can arrive their aims by means of earning management; but in the long run, managers will face with the plight of decline in the subsequent performance because of earnings management. Ultimately earnings management will affect the stock market. Base on existing research and combine with the character of SME Board, this thesis researches on the earnings management of IPO Firms in SME Board, and tries to propose some suggestion about how to keep it away.First of all,the thesis fixes the range of earnings management for the need of research. The earnings management that we study excludes the lawless behavior. The thesis analyses the reason why earnings management appear with the three economic theories, and think that the appearance of earnings management has inevitability in a certain extent. And then, we study the motivation of IPO firms in SME Board from both objective and subjective, and some earnings management tools available. Base these, we conclude that the firms in SME Board have earnings management behavior in the IPO process. To study more science and stringent, the thesis confirms the conclusion above by empirical study. We find that the sample companies have earnings management behavior and this leads to performance dad after boarded. Finally, the thesis analyses the conjuncture of earnings management and put forward five policy recommendations. We hope these suggestions can help to avoid or control earnings management in SME Board firms, keep away the marketable risk reflect on earnings management, and then the SME Board can grow up healthily and stride forward Growth Enterprise Market (GEM) successfully.