Empirical Research On Earnings Management By SMEs In IPO Proecss

Earnings management plays an importantl role in the process of initial public offerings. Both domestic companies and foreign companies have the motivation and opportunities to manage earnings in order to list and get more offering proceeds. In the shor turn, managers of the IPO firms can achieve their aims by means of earnings 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. Many scholars have done much research on A-share IPOs these yeare. In this paper, we will do a smaller subdivision that only focus on SME board. Base on existing research and combine with the characteristics of SME Board, this paper researches on the earnings management by SMEs in IPO process, and tries to give some advices to keep it away.This paper provides an analysis of the occurrence of earnings management from the perspective of economic theories and come to the conclusion that the appearance is inevitably in certain environment. Then we do some research on the motivation and means of earnings management of SME IPO firms from both objective and subjective side. With empirical rearch, we use the Jones-CFO modle to prove the hypothesis which is form theories analysis, and find the 50 sample companies have earnings management behavior which leads to bad performamce after listing. Finally, this paper analyse the negative influence of earnings management and offer five policy suggestions combined with the real condition of our country. We hope these proposals can help avoid or control earnings management in SMEs and keep away the risk of market, so that the SMEs Board can grow up healthily and stride forward Growth Enterprise Market (GEM) successfully.