The Study Of Earnings Management During The Reduction From IPO Lockup Expirations

Restricted-sale stocks in China's financial markets are generally divided into four categories: restricted stock of reform of assorted share holder(RAS),IPO restricted-sale stocks,additional restricted-sale stocks,and other restricted-sale stocks.Among them,RAS is mainly aimed at solving the “dual shareholding” problem,which caused by the inability of state-owned shares and legal person shares entering the circulation market.This is under the special economic system that the public economy is the main body in the beginning of the establishment of China's capital market.Up to now,the lifting of the ban on RAS has gradually come to an end,and its stock has begun to shrink.However,as China's capital market continues to mature,more and more companies are listed through IPO.The listed companies still have financing needs,and the equity incentive policies of high-level executives in companies are becoming more and more common.This means that the stock of non-RAS will not only accumulate but will increase sharply.Also,the lifting of the ban on RAS will continue for a long time.Existing studies have been accustomed to studying together with the shareholding reduction of all types of restricted-equity stocks after the lifting of the ban,and even take the sample of non-lifting shareholding reductions as the main shareholder.This ignores the particularity and importance of non-RAS shareholders' behavior of reducing holdings.Research shows that many company profitability levels have abnormally positive fluctuations during non-tradable shares sales,and directly lead to a rise in earnings per share.Once the IPO restricted shares are lifted,the interests of shareholders will be directly linked to the stock prices of the secondary market,and the accounting information which is used as the basis for investor decisions will most likely be used.Therefore,the internal shareholders have sufficient incentives to conduct earnings control in order to increase their share price for their own interests.Therefore,this article takes the earnings management phenomenon of the reduction of holdings by the IPO restricted shares from the GEM Board in 2013-2016 as a sample and studies the relationship between the reduction of holdings by the shareholders and the company's earnings management.This article first verifies that the limited-sales shareholder does exist in the process of reducing shareholder's profits.And try to examine the correlation between the type of shareholders,the proportion of reduction,the reduction of holding motives,the company's equity structure and earnings management during the reduction of holding by methods of theoretical deduction and empirical research,etc.Finally,the article draws the following conclusions through empirical research: First,when the shareholder is high-level management personnel,companies tend to choose to manipulate accrued profits for earnings management;Second,the higher the company's demand for liquidated debt,the higher the degree of earnings management with the reduction of holdings after the lock-in period;Third,when the market overestimates the value of the company,the shareholders will cut shareholdings after the lifting of the ban,and are more inclined to conduct real earnings management due to speculation;Fourth,the greater the scale of shareholder reduction,the higher the degree of earnings management of the company will be.This article focuses on the research of earnings management in shareholder reduction after the IPO lock-up period to protect the interests of small and medium-sized investors,improve the reliability of accounting information,and enrich the theory of non-RAS reduction.This study also provides some lessons for the orderly development of the capital market.