Empirical Research On The Choice Of Earnings Management Means Among Listed Companies Withprivate Placement Motivation

Private placement is one of the main refinancing ways among Chinese listed companies, compared to other refinancing ways, private placement has the advantages of lower threshold, higher efficiency and targeted issuance objects. The number of the listed companies and the scale of the private placement have increased year by year in China. The phenomenon of major shareholders in Chinese listed companies having absolute control is common, and it gives major shareholders a chance to manipulate the issue price into a profitable range, which may harm the interests of minor shareholders and the future performance of the company. The problem of earnings management in private placement becomes increasingly prominent nowadays.This research focused on the listed companies with private placement motivation, analyzed their degree of earnings management and what influenced their choice of earnings management means, from the perspectives of accrual and real earnings management. This research also explored the impact that different means of earnings management has on a company’s future performance, both in a short term and in a long term. This paper is divided into six chapters. The first chapter introduced the background and significance, contents and methods of this research; this chapter also described the research approach and possible innovations. The second chapter reviewed the Chinese and foreign literatures, then summarized the existing research results. The third chapter presented the theoretical foundation of this research, made an analysis on how these influence factors affect a company’s choice of earnings management means. The forth chapter is research design, in which relevant variables and regression models were designed to test hypotheses. The fifth chapter performed the empirical test and explained the results by descriptive statistical analysis, correlation analysis and multiple regression analysis. The sixth chapter summarized the conclusions of empirical research and proposed relevant suggestions.The result of empirical research shows that the listed companies with private placement motivation implement both accrual earnings management and real earnings management, and the degree of their manipulation is higher than the companies without private placement motivation. If the top one shareholder has more control, the company prefers to choose the means of accrual earnings management and production manipulation. If the external audit supervision is stronger, the company prefers to choose the means of real earnings management. External audit supervision can restrain accrual earnings management. But real earnings management does greater harm on the companies’ short-term and long-term performance in future.According to the conclusions of the empirical research, this paper proposed relevant suggestions on policy system, regulatory environment and corporate governance. The innovation point of this paper is that it has a unique perspective by focusing on the choice of earnings management means among the listed companies, especially under the background of private placement market growing rapidly nowadays. This paper also made contribution to the research on the choice and economic consequences of accrual and real earnings management in private placement, as well as, provided reference for the enhancement of corporate governance, external supervision and investor protection mechanism.