Private Equity Investment And The Reputation Of Underwriters’ Impact On GEM Listed Company’s IPO Real Earnings Management

Since 2009, the Shenzhen GEM was institued, many high-tech industrys get capital through the IPO market. The market brings more possibilities for rapid growth enterprises. However, it is found that GEM listed companies have significant profits management behavior in the before IPO in the study of IPO profits management of listed companies. Prior to the foreign scholars on profits management factors, the relatively small study on private equity investments in listed companies’ profits management before IPO, but also because of the impact of private equity on the growth enterprise market is becoming increasingly important, so study the impact of private equity IPO profits management becomes more necessary. In addition, the issuance system of the Shenzhen GEM is the sponsor system under the approval system and the auditing system is growing market; underwriters’ impact is more and more important. But for the present research, the underwriter reputation at home and abroad for research profits management are few. From the perspective of corporate governance thus starting the internal equity research factors, external factors influence private underwriter reputation of listed companies in Shenzhen GEM IPO profits management. Meanwhile, the GEM was instituted in 1999, the Institutional Building more perfect, this article Shenzhen GEM and GEM market comparative study in order to discover Shenzhen GEM market system problems and make recommendations.It is analyzed the process of IPO profits management, private equity investment in IPO profits management and reputation of underwriters for IPO profits management of relevant literature and theory. It focuses on the effect mechanism of the effect of private equity and underwriter reputation. Then according to the relevant literature as well as the theoretical basis of assumptions made in this paper, select the 406 companies listed in 2009-2014 in Shenzhen GEM and the 126 companies listed in 2002-2014 in Hong Kong GEM. After correlation analysis and multiple linear regression analysis, we can obtain the results. The results show that the two GEM listed companies a significant annual profits management before IPO. In addition, private equity will intervene before the IPO profits management inhibited and Shenzhen GEM IPO private equity investment profits management before inhibition is more pronounced. The impact of the reputation of underwriters’ is not significant in Shenzhen GEM, while the Hong Kong GEM market showed a remarkable negative correlation between underwriter reputation and IPO before profits management. Comparison of empirical conclusions and Hong Kong GEM market analysis, we found our Shenzhen GEM system to be improved, the private equity investment system still need to improve, underwriter reputation-building mechanisms need to strengthen, thus we finally made recommendations.