The Study Of China’s Listed Companies Private Placement Impact On Earnings Management

China Securities Regulatory Commission issuedthe Measures for the Administration of Securities Issuance in May 6,2006.Private placement has become the preferred method of seasoned offering of listed companies in China because of the advantage of low threshold and simple procedures,neither profit performance requirement, and no limit financing credits.If the sound development of the private placement can be, then, more conducive to the development of China’s capital market and play to their ability to regulate and optimize the allocation of resources.However, as China’s capital market development started late, at an early stage of development, the market mechanism is not perfect, the corporate governance structure and mechanisms to protect the interests of minority shareholders is not perfect, there are still many private placement market imperfections and regulatory loopholes.As there may be private placement during the re-distribution of the benefits of the new and old shareholders, major shareholders take advantage of the private placement transfer of benefits provided motivation.Under many conditions, will inevitably be some problems during placement.From the perspective of earnings management were analyzed by theoretical analysis and case studies of private placementdiscussion on the economic consequences of the existence of the private placement during earnings management behavior, motivations, methods and produce.Also provide a strong theoretical and empirical evidence for government regulators to strengthen supervision of the private placement and improve the company’s governance structure, and promote private placement play an active role.Comprehensive study of domestic and foreign related literature, studies have shown that a listed company public issuance, will use manipulation to achieve adjusted earnings before interest conveyed allotment and placement, aim to raise funds.Scholars also study the means of private placement of new shares during the transfer of benefits, mainly cheap to buy additional shares, attract overvalued assets into cash assets, etc.However, the existing domestic and international studies major study earnings management behavior of private placement, large shareholders and other transportation issues.With the prevalence of earnings management behavior, economic consequences and the market reaction which produces more and more academic attention.Therefore, this paper based on the domestic and foreign scholars, in-depth study of all aspects.In this paper,use the case study method, Selected the Renhe Pharmaceutical as research object.Renhe Pharmaceutical as a domestic pharmaceutical industry’s leading brands,before and after the private placement, the major shareholder of manipulation and showing the consequences of a large contrast to the financial statements and other phenomena studied whether the private placement of new shares earnings management behavior and the resulting presencehas a representative. Findings showed the Renhe Pharmaceutical conducted in private placement preliminary earnings management behavior, enhance business performance on the eve of the issuance, stable or raise the stock price, thus attracting more investors to raise funds.However, the company earnings management caused by good operating results but will result in a significant deterioration in the company’s future performance and financial indicators decreased significantly after the short-term, earnings management.Private placement before earnings management research for the company’s largest shareholder interests of transport provides a new research direction,thus better protect the interests of medium and small investors.Combining research findings,this article also raised relevant constructive targeted policy recommendations to promote the sustained and healthy development of China’s capital market.