Research On The Impact Of Sponsor System On Earnings Quality Of IPO Companies

Sponsor system as one of the major reform measures of IPO in our securities market,it plays a very important role, such as protecting the interests of investors, improvingcompanies’ earnings quality, improving the efficiency of collocation of capital marketresources and maintaining the normal operation of the securities. But since theimplementation of the Sponsor system, people always doubt its efficacy. With the A stockmarket performances announcing in2011years, many companies’ performances whichlisted in2010for the first time have been shown the dramatic changes, people willunavoidably to suspicious of the effect of the Sponsor system on improving the companies’earnings quality.Based on that, this thesis will study from the following two aspects: discretionaryaccruals and earnings conservatism to research the impact of Sponsor system on earningsquality of IPO companies. The research methods of this thesis merge the normativeresearch and the empirical research together. In the normative research, the thesis analysesthe choices of IPO companies’ accounting policies before and after the companies’ initialpublic offerings, and also analyses the impact of Sponsor system on companies’discretionary accruals and earnings conservatism. In the empirical research, the thesis usesdescriptive statistics method to analyze the characteristic of companies’ discretionaryaccruals, the choices of IPO companies’ accounting policies and the changes of IPOcompanies’ ROA before and after Sponsor system’s implementation. After that, the thesistests the significances and the differences of companies’ discretionary accruals andresearches the impact of Sponsor system on companies’ discretionary accruals andearnings conservatism by Hausman test.Through the study of this thesis, the implementation of Sponsor system alters the timethat the choices of IPO companies’ accounting policies. In the first two years ofcompanies’ initial public offerings, after Sponsor system’s implementation, companiesprefer to radical accounting policies, the companies’ discretionary accruals improve significantly, and the time a year ahead that regulation companies surplus by discretionaryaccruals. After companies’ initial public offerings two years, there are no significantdifferences in the discretionary accruals test results and it appears decline obviously. Sofrom the above research, results can be seen that the Sponsor system just alters the choicetime of IPO companies’ accounting policies, it does not alter the companies’ earningsquality.