| Four kinds of non-tradable stock exist on China security market at present, which are restricted stock of reform of assorted shareholders (hereinafter referred to as RAS), IPO restricted stock, refinancing restricted stock and other restricted stock (hereinafter referred to as Non-RAS). RAS is the result of solving history market problem to realize full circulation of security market, promoting the reforming of China capital market. Non-RAS is meant to curb speculation, protect the interests of small and medium-sized investors, strengthen governance of the corporates and better the capital market mechanism. The differences of origin between RAS and Non-RAS lead to the discrepancy of motivation and performance of restricted shareholders’ economic reduction behavior. Non-RAS shareholders sale more stocks than RAS shareholders after the restricted stocks are allowed to be sold. Up to now, the reform of assorted shareholders comes close to end and the stock of RAS is descending, while the stock of Non-RAS is ascending all along as a result of increase of IPO firms, expansion of need of refinancing, and change of executive incentive policies. However, previous studies mainly mix all kinds of non-tradable stock together, and non-tradable stock is composed mostly of RAS, so former researches obscure the particular character of Non-RAS.Based on statistics analysis, the earning level of public corporate shows significantly raise during the period of unlocking of Non-RAS. It is doubted that whether the variation of abnormal return of stock is due to the normal changes in performance or earnings management used to modify profits. During the lock-up period, Non-RAS shareholders can’t attain capital gains from the transfer of shares, but when the Non-RAS is released, the shareholders’ interest is directly related to the secondary shares market. Accounting information is an important factor that affects decision-making of investors, and the stock price will be interfered with discretionary accruals and real earnings management, drawing up the revenue of stock sale. So this paper chooses the earning management scale of public companies experienced unlocking of Non-RAS during year 2007 to 2013 as research object to study the relation of shareholders reduction behavior and the corresponding earning management. Firstly, this paper inspects whether there exists earning management before stock reduction of restricted shareholders. Then, respectively the correlativity of restricted shareholders manipulating ability to earning management, the correlativity of restricted shareholders reduction motive to earning management, the correlativity of reduction scale to earning management, the correlativity of nature of company’s actual controller to earning management are tested through positive analysis, so as to enrich restricted stock related research. Restricted shareholders manipulating ability is represented by shareholder’s shareholding ratio and whether it is institution investor. Liquidity demand and speculative motive are on behalf of reduction motives. Reduction scale is composed of reduction amount ration and value ratio. The nature of actual controller of a company includes state-owned and non-stated-owned company.The following conclusions are reached by empirical testing in this paper. First of all, it is confirmed that there exists earnings management both in discretionary accruals and real activity. What’s more, the correlativity of shareholding ratio to earning management is influenced by equity concentration Z and remained shareholding ratio after reduction. In detail, when the shareholding ratio is below 13.07%, the former shareholding ratio weakens the correlativity. When the shareholding ratio is above 6%, the shareholding ratio after reduction weakens the correlativity too. Thirdly, when the shareholder is institutional investor, the earnings management level of them is higher than that of investors of other type. Then dual function of speculative motive and liquidity demand exacerbate earnings management before deduction to get more cash. Fifthly, the reduction value ratio is more relevant to earning management than amount ratio, but a dumb variable of deduction amount ratio is significantly and positively correlated with earnings management scale, the variance of the set of amount ratio needs to be considered. Last but not least, state-owned enterprises show lower discretionary accruals than private ones.In China, the government actively promotes the perfection of capital market. Under the context of gradual recovery of China economy, this research on Non-RAS shareholders would provide certain enlightenment and reference for protection of rights and interests of minority shareholders, improvement of the reliability of accounting information, promotion of the development of policy environment and development the capital market. |
