Empirical Studies On Earnings Management Of Private Placement Equity By China's A-Share Listed Companies

Private placement,referenced and introduced from foreign capital market,has received favor from China's listed companies long before the Security Law carried out,due to its leasing standards and fast regulatory procedures.After “Management of listed companies to issue securities” put into effect and share-spilt successfully finished,private placement has become the most important re-financing method in China's stock market.The widely use of private placement is a good medicine to the re-financing problems of listing companies,which contributes to the full optimization of recourses.But some issues should also draw our attention: due to the faultiness of China's capital market and its mechanism,some loopholes of private placement would be taken advantage by the listed companies' major stockholders for their personal interests,which will threat the interests of minority stockholders.This article researches on private placement form the perspective of earnings management,in the hope of finding the different characteristics in earnings management between different targeted investors in private placement.This article summary the theories on private placement and earnings management,then selects some listing companies in China which successfully finished private placement in 2013 as samples.This article builds Jones Model to evaluate the level of earnings management by comparing maneuverability accruals between sample companies,and also builds regression model to detect the influence of ROE index on companies' performance before and after private placement.The finding shows that listing companies which carried out private placement did have the incentive for earning management.When private placement is issued for major stockholders and their affiliated parties,the direction of earnings management would be negative;when private placement is issued for institutional investors,the direction of earnings management will be positive.The listing companies' major stockholders' stock holding after private placement is in proportion to the level of earnings management,but the level of earnings management would have a negative impact on the performance of listing companies after private placement,the higher level of earnings management,the worse performance listing companies have.In the end,the writer provides some relative regulatory suggestions.