The Research On Earning Management By IPO Firms In SME Board

From the western scholars began to study earnings management in1980s to present, Numerous studies have shown that earnings management is always playing an important role during the listed company’s IPO, Although short-term earnings management can help managers achieve success and high public purpose issue, but in the long run, earnings management after the IPO may bring the negative impact on operating performance, which also on the stock market. In recent years, scholars of China IPO earnings management of listed companies also have a lot of research, but mostly concentrated on the Main Board. In China, since the SME board was officially launched in the Shenzhen Stock Exchange in May2004, it is already established six or seven years, in view of this, this paper is based on research about the characteristics of the SME board, by analyzing IPO companies in SME in2007and2008. Studying5years of data before and after the IPO, and its earnings in the IPO process, then, this paper has attempted to give some policy recommendations to prevent earnings management in the listed companies’IPO in SME board.First, this paper has analyzed the causes of earnings management behavior from a theoretical point of view, found that the existence of earnings management has a certain inevitability; and it has studied the motivation for earnings management from both subjective and objective, as well as the main method of earnings management. Secondly, to make the study more rigorous, the article has used the empirical research to test the above conclusions, the research found that the samples in the IPO process exactly exist positive earnings management behavior, primarily through accruals and adjustments, and after earnings management in IPO the Company Performance has declined; in addition, studies have also arrival at a conclusion that the level of earnings management is appeared inverted V-shaped distribution overall based on the IPO year. Finally, based on the study, this article proposed some relevant policy recommendations about IPO earnings management combined with the actual situation in our country.