The Relationship Between Equity Structure And Earnings Management In SEOs Of Listed Companies

In recent years, Seasoned equity offerings (SEO) has gradually replaced allotment of shares become enterprises'first-selected way of equity re-financing. At the motive of get the qualification of SEO, successfully issue and manipulate price, avoid litigation and lock-period pressure, the enterprise will implement earnings management. Chinese listed company have the obvious shareholding structure of negotiable stock and nonnegotiable stock separation, highly concentrated structure of property rights and institutional investors'shareholdings is lower. Thus,identifying the listed companies'earnings management features under special shareholding structure in China and reduce earnings management, have very important significance for investors and supervisors.Theoretically,when listed companies implement SEOs, shareholders of different positions have different influence on earnings management to protect their own benefits. First shareholder and the governance will regulate earnings management to encircling money, negotiable shareholders can supervise and quit to reduce earnings management in SEOs, institutional investors can participate in resolution of SEOs in three ways.Under the basis of theoretical analysis, we use samples of successfully implemented SEOs'a-share listed companies in 2003-2009, testd the relationship between shareholding structure and earnings management three years before , the current year and one year after SEOs. The results indicating that when first shareholder's shareholding is higher,the degree of earnings management is higher. First shareholder's state-owned nature has nothing to do with earnings management, which shows it's the shareholding rather than the shareholder's nature influenced degree of earnings management. When negotiable stock and institutional investors'shareholdings is higer, earnings management is lower.At the end of this paper, put forward policy suggestions to reduce earnings management, including improving shareholding structure of listed companies and perfect the current policies.