Study On Relations Between Earnings Management And Refinancing

In order to survive and develop, listed companies must expend production. Expandingthe scale of production is inseparable from the demand for capital. The main ways ofobtaining funds of listed companies is refinance. In recent years, the scale of the refinancinghas been ahead of IPO financing. Now, China’s capital market is setting off a surge ofrefinancing boom. To protect investors’ interests, promote the healthy and orderlydevelopment of capital markets, optimize the allocation of resources, Securities regulatoryauthorities have made stringent restrictions on the qualifications and conditions of therefinancing. But this policy encourages listed companies to manage earnings andmanipulative profit which in order to reach Refinancing of qualifications. Therefore, prior tolisted company during the refinancing, the authenticity of its reported earnings is questionable,specialized research on earnings management behavior is necessary.This paper selects the2010allotment of18companies and129private placements forthe study sample. Existence of earnings management through the comparison of thetwo-sample descriptive statistics and the sample mean T-test analysis. Through thecross-sectional modified Jones-model for the process of refinancing the existence of earningsmanagement behavior further validation. This article also incorporates the new systembackground; analysis of listed companies may use the means of earnings management. Thestudy found that listed companies have the equity refinancing a higher degree of earningsmanagement behavior in the year before. Whether it is a allotment company or privateplacement company has earnings management through the steerable accruals before refinance.The performance of refinancing maneuverability accrued profits significantly higher thanother companies in the same industry; Through regression analysis we found that the assetdepreciation and amortization and other recurring accruals; impairment assets of the project,debt restructuring,loss on disposal of non-current assets and other non-operating income,investment gains and other non-recurring gains and losses is the principal means ofadjustment of profits for listed company earnings management.