The Study Of Correlation Between Earnings Management And Corporate Performance Around Secondary Equity Offerings

" Funds is the lifeblood of a company " this sentence highlights the importance of funds for listed companies,enough funds not only to ensure normal production activities of listed companies,but also help the companies to develop themselves continuously and obtain a favorable position in the fierce market competition. With the continuous improvement and development of capital, secondary equity offerings has become an important way to get funds for listed companies.However,due to the scarcity of resources,enormous number of listed companies are engaged in the fierce competition for the limited funds. In order to safeguard the interests of investors, optimize the allocation of resources and improve the mechanism of refinancing, Securities regulatory authorities define the qualifications and conditions of secondary equity offerings and make some stringent requirements,this make some listed companies do earnings management which is used to gloss over their own earnings information to meet policy requirements of regulatory authorities and get the qualifications of secondary equity offerings.After the listed companies get the qualifications of secondary equity offerings and obtain enough funds to develop,normally the corporate performance should increase,but due to the earnings management before the secondary equity offerings,the performance is not as good as the investors imagined,some companies performance has declined compared to the prior period.Thus,it is essential to study the listed companies’behaviors of earnings management before the secondary equity offerings.First,this paper analyzes the background of the study,then puts forward the necessity and significance of the study.Second,this paper describes relevant theory based on the review of domestic and foreign literatures and introduces the concepts of accrual earnings management and the real activities earnings management,this paper also introduces the ways and choice of secondary equity offerings.Based on this,this article uses listed companies of A-share that have done secondry equity offerings as sample to do empirical research.Through basic statistical analysis and multiple regression analysis,comparing the sample mean and doing T-test,we verify that isted companies will conduct earnings management before secondary equity offerings,also find the relationship between earnings management and the decline in performance.We also find that the accrual earnings management led to short-term decline and the real activities earnings management led to long-term decline.Finally,we summarize the conclusions and make some personal advices.