The Empirical Research On The Private Placement And The Earnings Management

In recent years, with the rise of private placement, more and more enterprises adopt this kind of financing way, when the securities and futures commission formulates the system of private placement, the purpose of private placement should be to improve business performance, reduce the related party transactions, optimize the allocation of resources, improve the service efficiency of funds.But due to the variety purposes, subscription objections of the purchase placement, the different ways of purchase placement make enterprises have opportunities to manipulate earnings. Earnings management’s appearance is often associated with directional add-issuance. In the private placement, stakeholders want to achieve their personal goals by earnings management, the mode can be divided into the accrued items earnings management and the actual activities earnings management.Based on the combination of theory and empirical methods,this paper study the existence of the earnings management in the private placement. Study finds that in the private placement, earnings management is influenced by the purpose and the purchase of the private placement. when private placement’s goal is project financing, enterprises tend to implement positive earnings management, the study also finds that when the subscriber are only institutional investors, the earnings management’s positive direction is more apparent, it indicates the big shareholders have suspicion to hollow the operating results of the enterprises. When the goal of the private placement is for the group’s overall listing, controlling shareholders’interests is consistent with the corporate, accrued earnings management and real earnings management direction is positive.T he relationship between the first big shareholder’s shareholding and the degree of earnings management is positive.The study also finds business performance of the enterprise declines after the private placement, earnings management will damage the enterprise future operating performance, compared to the accrued items earnings management, actual activities of earnings management’s influence on business performance is more obvious, the accrued items earnings management mainly affect the short-term operating results of an enterprise,real activity earnings management has more influences on the operating results after a long time. This article from a more comprehensive perspective to consider the phenomena of earnings management by combining secondary objects and offering targets, this is the biggest innovation point, at the same time, this study enriched the research of this field, and hopes to solve the problem of private placement and earnings management to provide theoretical foundation and empirical basis.