Empirical Research On The Relationship Between Governance Structures And IPO Earnings Management Of SME Board Listed Companies

Earnings management is always a hot subject in the accounting research filed. Companies for various purposes, such as initial public offerings, share placements, to avoid being delisted as well as other motives, will conduct earnings management behaviors, by the way of modifying the relevant financial indicators. In China, companies in order to get enough money for expanding the scale of production, or market, they pay more attention on the capital market, seeking financing by listing on the stock market become their best choice. Different from large state-owned enterprises, most of small and medium enterprises have financing problems.The development of small and medium-sized board provides SMEs with a new financing channel. Therefore, in order to secure the funds to promote the further development, SMEs in the initial public offering has a strong motivation for earnings management. The governance of Earnings management in the IPO process has always been a big problem, there are many factors affecting it, but corporate governance structure is the root cause which the problem lies in. In past research of IPO earnings management, scholars always use the overall A-share listed firms as the research object, rather than focus on some specific groups. In fact, unlike the Main Board listed companies; small plates listed companies have their own characteristics in the corporate governance. Therefore, it's very meaningful to use the small plates listed companies as our research object. The research of corporate governance structure of small plates listed companies on the impact of IPO earnings management an not only help investors better understand the accounting information, but also help the relevant regulatory authorities develop effective measures, according to their specificity, to keep small and medium plate market developing healthily.This paper leads an empirical study of IPO earnings management from two aspects, the internal governance structure and external governance structure of SMEs. The empirical results show that ownership concentration, venture capital, independent directors as well as debt capital markets can significantly affect IPO earnings management. Companies with more ownership concentration and more financial risk are also more inclined to conduct earnings management, while venture capital and independent directors are able to inhibit the behavior of earnings management. Finally, this paper raises proper recommendations to limit earnings management, such as optimizing the ownership structure, improving board of directors system as well as the debt capital market.