The Study On The Effect Of Venture Capital Upon Listed Companies' Earnings Management Behavior

In May 2004,China launched the SME board.In October 2009,the GEM board was officially listed.By the end of December 2016,the number of listed companies in the two markets reached 1,572.The debut of the SME and the GEM board in the history stage of capital market not only plays an active role in alleviating the financing problems of SMEs,but also provides a great opportunity for the rapid development of venture capital industry.The huge effect of creating wealth has prompted the rapid rise of the venture capital industry.In order to gain capital appreciation,more and more venture capital chooses to help the small and medium-sized enterprises in IPO listing through investing funds and taking part in the management.On the one hand,the intervention of venture capital may play a role of authentication and supervision,restraining earnings management behavior;on the other,the venture capital may have an �grandstanding effect� which encourages or even helps the listed companies to manage earnings.At present,the existing research on the effect of venture capital upon earnings management focuses mainly on pre-IPO and IPO,but less on post-IPO.However,the lock-up policy determines the venture capital cannot withdraw immediately from the invested enterprises.On this basis,this paper try to study the relationship between VC and earnings management behavior from the new perspective of the post-IPO,and then discusses whether the VC sends the director and other characteristics have different effects on earnings management.Based on the sample of 1362 listed companies in SME and GEM from 2004 to 2016,this paper uses the modified cross-sectional Jones model to measure earnings management behavior of listed companies.Then establish multivariate regression model to empirically examine the impact of venture capital on the company's earnings management behavior separately from three perspectives of the full sample?lock-up period sample and lifted period sample.The results show that the listed companies generally have positive manipulation of the surplus,and the degree of manipulation in lock-up samples is obviously larger than the lifted samples.Moreover,in terms of which sample,the earnings management of SMEs that with venture capital involved in is significantly greater than that without VC,that is,venture capital performs significant �grandstanding effect�.Based on the above research,this paper continues to study the influence of the dispatch of directors and other characteristics of VC on earnings management.After controlling the correlated variables,the multivariate regression results indicate that the different characteristics of venture capital institutions have differential effects.The earnings manipulation of the company with arranged director is higher than the one without arranged director.On the contrary,companies with VC involved in which has high shareholdings,state-owned background and joint investment background manipulate the surplus to a low extent.Furthermore,there is no significant difference in earnings management whether VC have brokerage related background.This paper provides a new perspective for the study of venture capital,which further subdivides and enriches the achievements in the field of venture capital.Based on the conclusions,this paper puts forward some proposals on adjusting and improving the listing standards,strengthening the information disclosure system,sounding the laws and regulations of the venture capital industry,and so on.All these suggestions have certain implications for cultivating the healthy venture capital system and promoting the standardized development of China's securities market.