Study On Real Earnings Management Before Directional Private Placement Of Listed Companies In Our Country

Earning management in seasoned equity offerings maintains a hot researching issue in academic circle. With the set of non-tradable share reform concluding, directional private placement is proved to be a popular option for listed corporations in seasoned equity offerings. Earning management is classified into two kinds, accrual items and real activities. However, in China, study on real earnings management remains in preliminary stage, the existence of real earnings management in directional private placement, as well as the influence of placement object and share proportion of major shareholders, has not drawn a systemic conclusion. The impact of real earnings management on enterprise’s stock price still need further research. This thesis mainly focus on studying the real earning management behavior of manufacturing listed corporations in China’s A-share market, hoping to inspire relevant stakeholders with approach of investment and financing. Moreover, this paper also aims at improving legislation and supervision, as well as regulating behaviors in capital market of our country, which will promote its sound and sustained development.In this thesis, taking manufacturing listed corporations which made directional private placement in China’s A-share market in 2011 as sample data, real earnings management in the process of seasoned equity offerings is studied empirically. Result shows that, firstly, in manufacturing listed corporations, real earnings management exists the year before refinancing equity, and the property of earnings management differs with the object of directional refinancing. More detailed, if object are shareholders or their related parties, negative earnings management will be carried out by listed corporations. Secondly, the intension of real earnings management in the year before directional refinancing is also concerned with share proportion of the largest shareholder. The higher share proportion the largest shareholder enjoys, the more intensive real earnings management will be undertaken. Additionally, in the case of seasoned equity offerings in manufacturing listed corporations, we also found that if the companies carried out the negative earnings management, the market will show a positive price effect. If the companies carried out the positive earnings management, the market will show a negative price effect. The conclusion in this thesis contributes a vital theoretical basis for strengthening supervision to listed corporations, optimizing corporate governance structure and promoting effectiveness of information disclosure.