The Characteristics Of Equity, Intermediary Institutions Reputation And The IPO Earnings Management

A lot of researches show that there are significant earnings management behaviors before and after the initial public offering. IPO earnings management problems have become one of the hottest issues about capital market in recent years. Company can manipulate the business performance in information disclosure which cannot really reflect the company’s financial position, operating results and future profitability. This will not only mislead stakeholders for a company’s real value judgment, and not conducive to the long-term development of the capital market in China, In order to solve this problem, it is necessary to analyze the factors that influence earnings management in the initial public offering of China’s enterprises.From the point of internal factors, corporate governance is a mechanism to coordinate each stakeholders, effective corporate governance system can have influence on earnings management behavior. But under the modern corporation system in our country, the unsound company governance mechanism is the root cause of the earnings management, and shareholders as the main body of corporate governance in the manipulation of the accounting surplus play an important role. It shows that equity structure is the foundation of corporate governance, different ownership structure determines different enterprise organization structure, so as to determine the different corporate governance structure, finally decided to the enterprise behavior and performance. In this paper, research on corporate governance from the perspective of equity characteristics influence on IPO companies earnings management.From external factors, intermediary organizations play a vital role in the process of initial public offerings and supervise the company in the process of IPO earnings management behavior. In order to alleviate the situation of asymmetric information between the enterprise stakeholders, reduce the agency cost between them, the fair and open status of intermediary agencies is more and more important. With the constant improvement of securities market supervision system in China and the China Securities Regulatory Commission in2009"about modifying the decision of the securities offering sponsor business management approach", the function of sponsor lead underwriters and audit financial information of the reputation of the accounting firm to a certain extent, restrict the company earnings management behavior in the process of IPO in our country. But because our country securities market development is not mature, intermediaries in the process of IPO has not caused enough attention, did not play its proper role. Through the study of this article to inspection agencies in the capital market in China can be fair to assist company to go public, protect the interests of investors and to a certain extent, influence the earnings management behavior of enterprise in the process of IPO.This article adopts the method of empirical study, draw lessons from existing research results at home and abroad, based on the principal-agent theory, asymmetric information theory and further analysis of intermediary supervision hypothesis, puts forward the hypothesis of this article. In order to verify the hypothesis, this paper is collected from2010to2012of China’s A-share IPO companies as research samples, through the establishment of mathematical model for empirical analysis. The empirical test results found that the proportion of state-owned shares and EPO companies earnings management is significantly related to show that shareholding system reform in our country is not complete, the increase of the proportion of state-owned shares increases the possibility of the IPO accrued earnings management and real activity earnings management; Management ownership and earnings management is related, but not significantly, perhaps because executives shareholding in the listed companies in our country is mostly as a kind of incentive mechanism, executives don’t assembly to IPO stock manipulation of accounting surplus; Institutional investor shareholding and earnings management are related but not significantly, thus it can be seen although the proportion of institutional investors in China’s IPO companies increasing year by year, but institutional investors are not as expected play an effective role in corporate governance.The first big shareholder is closely relative to earnings management, but the results of the regression are not significant. In recent years, our country strengthen the supervision of the initial public offering of enterprises, the relatively decentralized equity structure has not yet formed big shareholder control, the profit motive for big shareholders in the initial public offering by earnings management behavior is not strong.Intermediaries with good reputation in the process of the initial public offering do not play the role of effective inhibition of earnings management. That sponsor approval system of our country still needs further perfection and development, the development of the domestic accounting firm at the same time, make the enterprise reputation in initial public offerings are not limited to high international accounting firms.In a certain extent, the characteristics of the company impact on earnings management of IPO companies. The company scale is larger, the more easily the company may manage the earnings because of the complex agent problems. The company that the profitability is good may manipulate the accounting surplus information through the real activities. This article research value and the innovation place of mainly have:1. The article is based on the company which is in the initial public offering, and uses this specific earnings management motivation to study the relations between the characteristics of equity, intermediary institutions reputation and the IPO earnings management. Two ways are used, accrued items on earnings management and real earnings management in two ways. By studying of earnings management affecting the way of securities market, it will regulate the securities markets of China and provide reference to formulate relevant policies and regulations.2, Along with the continuously understanding of the corporate governance mechanism, internal and external corporate governance mechanism will have an effect on the company’s earnings management behavior. Therefore, this article considers the internal and external corporate governance mechanism with the earnings management, the diverse perspectives of the relationship between the affecting factors of earnings management in the process of IPO, enrich the research contents of corporate governance and earnings management. It will provide theory for the establishment of the relevant Tegulatory policies and regulations and promote the perfection of the internal governance structure of listed companies in China and the healthy development of the intermediary agencies.3, The capital market of western developed countries set up earlier. The mechanism is relatively sound, the related research is more mature, and the development of capital market in China and related research are the western developed countries have a large gap, so we cannot blindly copy the western scholar’s research. We should base on China’s capital market background, combining with the characteristics of the special system in China, in this way can we truly contribute to the long-term healthy development of capital market in China.