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The Empirical Research On The Effect Of Venture Capital On Real Earnings Of GEM IPOs In China

Posted on:2015-02-16Degree:MasterType:Thesis
Country:ChinaCandidate:Q Y PengFull Text:PDF
GTID:2269330425993979Subject:Finance
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The Growth Enterprise Market (GEM) launched in China’s securities market with28companies listed On October23,2009. These companies were fanatical pursuit of money and average soared106%on the first day. On the one hand GEM provides a broader financing platform for small and median enterprises; on the other hand, it also broadens the exit channel of venture capital and enriched level of capital market. However, taking the hard GEM qualification into consideration, more and more small and median enterprises will distort the real financial surplus situation and whitewash the required financial indicators for listing on GEM IPO as soon as possible. The problem of real earnings is also serious in it.Previous earnings management has been focused on the portion of the accrued earnings managementAs the regulatory authorities and the relevant accounting standards improving its requirement, CFO may tend to use earnings management through real transactions. Compared to the accrual earnings management, real earnings management is more subtle and can not be easily to find through regulate corporate financial data. But the real earnings management has a potential risk of destroying the long-term value of the company venture capital should play as a "signaling mechanism" to allows investors to obtain more real company information. Since venture capital will take participate in company’s management process, it can realize the company’s real-mode operation and its market value more clearly.To investigate the impact of venture capital on real earnings management, I choose the companies listed in the GEM from October2009to December2012as samples, which355in total and321after selected. First, I choose Roychowdhury model and modify it to measure real earnings management. And then, using Pearson correlation test and multivariate stepwise regression analysis, this paper ensure the final model to research the impact of venture capital on real earnings management. The result shows us that real earnings management exist in the year before GEM IPO significantly. And VC-backed companies listed on GEM have lower real earnings management than non-VC-backed companies. But the "restless effect" dominate when several venture capital institutes joint invest an IPO in GEM, leading to a higher real earnings management.
Keywords/Search Tags:Venture Capital, Real Earnings Management, Modified model, Growth Enterprise Market IPO
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