Earnings Management Of Listed Companies Based On Equity Financing

In recent years, China’s capital market has developed rapidly, but there are alsosome problems,such as the imperfection of the long-term borrowing market and bondmarket,the high risk of long-term loans. As a result, equity financing become themain way of enterprise financing. Along with the quick extension of the scale ofequity financing,the refinancing scale grows quickly. Financing scale has formed thepattern of "neck and neck" with initial public offering and seasoned equity offering.Because securities market related system is still not enough perfect and lags farbehind the reality needs, earnings management is widespread on equity financing oflisted companies. Market price of stock is not truly reflect company performancewhich on the basis of the surplus, But relying more on, such as policy, news, etc., orjust relying on the company’s accounting earnings during the reporting period. Thecompany managers have an incentive by manipulating the accrued items and tradingactivities to enhance the benefits during the reporting period. The frequent fraud casesof the listed companies make the social credit of listed companies faces seriouschallenge. At the same time, the listed companies’performance after seasoned equityoffering declines in widespread phenomenon. Research of scholars both at home andabroad shows that the listed companies’earnings management behavior in seasonedequity offering process is the main reason that leads to this phenomenon.This article is named by “Earnings management activities around accrual basedand real earnings management activities around seasoned equity offerings”and hopesto solve the following questions:(1) If there are accrual based and real earningsmanagement activities around seasoned equity offerings at the same time;(2) If thereis, whether the two types of earnings management impact on the performance of thecompany after seasoned equity offerings; If affected, what kind of influence the twotypes of earnings management would impact on. This article selected103listedcompanies that did SEO during the year2007to the year2008as the research sampleand studyed the accrual based and real earnings management activities around seasoned equity offerings. The research found that:(1) Both accrual based and realearnings management activities exist around seasoned equity offerings.(2) Ourevidence implies that the decline in post-SEO long-term operating performance isattributable to real activities management and the decline in post-SEO short-termoperating performance is attributable to accruals management. According to aboveproblem this paper put forward the following suggestions: strengthen thegovernment’s supervision of the securities market and improve the staff’s professionalquality; perfect our country capital market system and provide more financingchannels to the listed companies; improve the system of securities issuance of listedcompanies and use the quantitative financial indicators and qualitative indicators in areasonable way.