Founder Shareholders’ Changes Of The Shares And Earnings Management Of The Growth Enterprises Market

The Growth Enterprises Market of China was established in October 2009, as a new stock market, the GEM brings new ways and hope for innovative small and medium-sized enterprises’financing, and the GEM is popular with investors, so far, more than 400 companies listed on the GEM successfully.The extra financing, high PE ratio and high issue price, is a universal phenomenon of the listed companies on GEM. When the GEM was set up one year, and the restricted stock of the first batches of listed companies’top manager came to circulation times, the top manager’s cutting shares undermined investor confidence seriously. The top manager’s stock-holding is low, but the effect of the cutting shares couldn’t be ignored. Worst of all, the effect which is the founder shareholders’restricted stock come to fluent stock brings. So, we need to know why the founder shareholders sell the stock? In the process of selling stock, if the founder shareholders manage earnings by using their convenient conditions. What measures should be took to prevent this kind of large-scale cutting stock happen?With the above background, the author of this paper study the founder shareholders’ cutting stock and earnings management. First, collect the related documents. Secondly, sum up the relevant theories of earnings management, including the basic theory of earnings management, the means of earnings management, the measurement methods of earnings management. In this paper, the author uses modified Jones model (performance) for calculating the sample data, and the result showes that listed companies’ founder shareholders of the GEM do exist the motives of earnings management. In the regression of the manipulability accrued profits and ownership and proportional reduction, result is not ideal, so we can not get the conclusion of that earnings management and ownership and proportional reduction have positive correlation. This article study the huayi brothers media group, and the results have shown that the company exists earnings management motivation before Wang Zhongjun and Wang Zhonglei’s cutting stock, and we also could find some evidences in the balance sheets that the company existed earnings management.Finally, the author puts forward some suggestions help to improve reference basis of the GEM.