Empirical Study On Profit Manipulation Affecting Business Performance After IPO

With the GEM(Growth Enterprise Market) opening, people focus on the Small and medium enterprise financing. However, GEM's problem is as the same as motherboard market. This is that the company's performance has not only increased, but decreased significantly after IPO. This issue has become a new confusion of research IPO, named "IPO effect". Therefore, the research on this issue not only of theoretical significance, but also has some practical significance.There is a lot of study of the IPO company performance's decline and its reasons. Under the study, profit manipulation is the most important reason of the decline. Therefore, at the beginning, I describe the definition of IPO, company performance, and profit manipulation. Then I explain the theory of profit manipulation and the impact on business's performance. This process makes the paper more logical.Then, I divide the empirical phase into two parts. First, I descript the 108 samples'trends and test the trends'significance. The results confirm the truth that IPO of SMEs operating results decreased significantly. Second, the paper will examine the relationship between performances' decline and profit manipulation on the first basis. In the course of the paper, empirical methods include:Firstly, wilcoxon signed rank test is used to descript the samples'trends and the trends' significance. Secondly, least squares estimation s carried out to make a model by panel data. After comparing the various factors, I confirmed that the profit manipulation is the main reason of the business performance's decline after the IPO of SMEs. In addition, the paper's results also obtain the profit manipulation's motive and means. The motive is the executive compensation; the means is the manipulation of corporate investment income. At the end of the paper, I have some suggestions in order to take more attentions.