Large Shareholders' Subscription,equity Balance And Earnings Management

In recent years,private placement has become an important channel to finance for listed companies.Large shareholders subscribe the stocks of private placements with a high participation and a large proportion.The studies have shown that large shareholders have self-interest behaviors to grab the excess return in the subscription of private placements,which damages the interests of minority shareholders.This paper will study whether the large shareholders can control the stock price by controlling the earnings management behaviors of listed companies combined with the large shareholders' subscription in private placements,and which kind of earnings management is more preferred;whether the equity balance has effects on this self-interest behavior;finally,the influence of the nature of equity is considered based on the special institutional background of our country.First of all,this paper chooses the listed companies from 2013-2015,in which large shareholders subscribe for the private placements,then use the Modified Jones model and Roychowhury model to calculate the relevant value of accruals and real earnings management,and test whether exist two kinds of earnings management behaviors.Secondly,this paper divides the samples into the experimental and control group,and then use single sample T test to analyze the effects of check-balance shareholders.Based on the above analysis multiple regression analysis is used to test the effects of equity balance on the two types of earnings management,and then draw the conclusions.Finally,based on the special institutional background of China,this paper adopts the grouping test method to study the different effects of equity balance on the earnings management between the state controlling and non-state controlling listed companies,to study whether the effects of equity balance on the earnings management is changed by the nature of the controlling shareholders.The possible innovations and main conclusions of this paper are as follows:First,when the large shareholders participate in the subscription of private placements,the listed companies have two kinds of earnings management behaviors,which are negative accruals and real activities.Second,when explore the role of equity balance on corporate governance,the theory circle seldom combine with a specific event and don't distinguish the different types of earnings management.This paper will study the effects of equity balance on the two kinds of earnings management behaviors in the event of private placements,the conclusion shows that equity balance plays a governance role in the real earnings management,but there is no significant effects on the accruals earnings management.Third,it is of great practical significance to study the impact of equity nature on earnings management,however,the influence of this factor is seldom considered.Therefore,this paper will introduce the factor and test its influence,also test the nature of large shareholders will limit the role of equity balance.It is found that the equity balance only has an inhibitory effect on non-state large listed companies,and there is no significant relationship with the state large listed companies,which shows that the "one big share" of our country's state large shareholders hinder the equity balance mechanism.