Venture Capital And The Emipiral Research On Earning Enmagement Of GEM

Nowadays, Venture capital (VC) as a new investment in rapid development, a growing number of start-up enterprises has the background of venture capital, they add fuel to the flame in initial public offering (IPO). In2009, the launch of the growth enterprise market (GEM) get through the exit channel of the venture capital industry, the venture capital industry bring about regreat-leap-forward development. However, the majority of enterprises in order to achieve the purposes of IPO, and by means of earnings management(EM) in the IPO process to manipulate profits. In which role venture capital plays is worth exploring.In this paper, a method of combining normative and empirical research to analyze the impact of venture capital background listed companies’earnings management behavior. First, there is a theoretical analysis as the foundation of the "asymmetric information" theory and "Certification" theory, and secondly we select the GEM of IPO from October30,2009to December31,2010, with IPO as the critical point, and research earnings management behavior of the Pre-IPO year, IPO year and the follow lock-up year, which base on the financial data of2007-2011, and then distinguish the non VC-backed and VC-backed listing corporations to T test and Mann-Withney U test. We subdivide VC further into long-term VC and short-term VC. Finally, we chooses the modified Jones model with ROA as the measure of EM, then multiples linear regression model to contrast analysis.We angle of Venture capital view to explore the earnings management behavior, and select the experience data of China emerging GEM to verify the following two questions layer upon layer:(1) the difference of earnings management between the VC-backed listing corporations and the non VC-backed’s in Pre-IPO year, the IPO year and lock-up period within a year, and then test VC play inhibited or fueling role in earnings management behavior;(2) whether the two types of long-term VC and short-term VC difference or not in their support listed companies’ earnings management behavior. The empirical results of this paper shows that the listing corporations’ earnings management normally exist both in VC and non-VC companies, but there is a slightly stronger in VC company, it means that supervision function of Chinese VC in the GEM doesn’t work, maybe because of the short-VC. The growth of VC listing corporations generally higher, which support the certification hypothesis. As time goes on, before the quit of VC, this "certification" will always play the supervision role. It founds that long-term VC institutions has a level negatively relation with the earnings management in5%conspicuous level, while short-VC performance is not obvious.