A Contrastive Empirical Study On Earning Management By Chinese Corporation Around The IPO Process

The stock market in our country has developed under a special system background, since it was established. Unlike the western developed countries, it was not a natural output of the development of the commodity economy. Our country's stock market has serious congenial tendency, many firms treated the stock as the best way of achievement the non-cost fund way.So, in order to get most money, the managers of the IPO firms have the intense motive to make use of the asymmetrical information between firms and supervision departments to manage their earnings. The existence of earning management has negative influence on the healthy development of stock market and the protection of the investors'confidence to the market.This paper is to draw some useful conclusion for the market supervision and consummation related laws and regulations through the empirical study, especially for the control of the earning management.This paper chose 178 Chinese A-share IPO samples of Shanghai and Shenzhen capital market from 2006 to 2007, and analyzed their performance of earnings. This paper carried on the descriptive statistical analysis and the supposition examination to the sampled data, and explained the existence of the earning management, and the way it existed. And at last, this paper put forward some suggestions about the laws and regulations of accounting, auditing, and so on.This article draws the conclusions as follows:First earning management exists in the sample firms. Second, both the Expanded Jones Model and the Revised Jones Model by the Chinese scholars are not fit for explaining the earning management of the Chinese A-share firms. Third, the firms usually carry on the earnings management through the control of income and the expense.