Private Placement?Earnings Management And Corporate Performance

As the most mainstream refinancing method,Private Placement has caused many problems behind the well-flowing growth to lead to strict supervision by the CSRC.In 2017,it became a key node for the transformation of Private Placement policy,and the Private Placement will be bid farewell to the “no threshold” era.Because Chinese enterprises have a special shareholding structure of “one big share”,Private Placement is actually a refinancing behavior manipulated by major shareholders.At the same time,enterprises also grant managers options through Private Placement,and such options do not need Managers achieve performance indicators,so in the process of Private Placement,the management of the company has a strong motivation to manipulate the performance level to obtain a satisfactory price range.A large number of studies show that earnings management is the main means for companies to manipulate their performance(Teoh et al.,1998;DuCharme et al.2004;Chen Xiaoyue et al.,2000;Lu Zhengfei et al.,2006).Based on the above background,this paper selected A-share listed companies with Private Placements in years from 2012 to 2017 as research samples,and deeply studied the earnings management motives and their influencing factors in Private Placement based on two types of earnings management methods;and selected A-share listed companies with Private Placements in years from 2012 to 2013 as a sub-sample to study the economic consequences of different earningsmanagement methods.This paper mainly studied this topic from three aspects:1.Select the non-Private Placement company as the control group sample to do the difference analysis with Private Placements company samples,and using the multiple regression model to study the earnings management mode and motivation of the Private Placement enterprise;2.Research on the factors affecting enterprise earnings management in Private Placements;3.Study the impact of different earnings management methods adopted by enterprises in the process of Private Placement on the company's post-performance,thus verifying the relevant theoretical hypothesis.The conclusions of the study indicated that: 1.The degree of real earnings management of enterprises participating in Private Placement is generally lower than the degree of real earnings management of enterprises who did not participate in the Private Placement,while the difference in accrued earnings management is not significant,indicating that in the Private Placement,in order to avoid being recognized by investors and regulators and there is generally a motive for “interest transfer” to do real earnings management.2.The real earnings management degree of the company whose Private Placement stock sales restriction period are restricted for more than one year is positive and significantly higher than the real earnings management degree of the company whose stock sales restriction period is less than one year,indicating that the period of restricted sales of Private Placement stock shares will influence the company's real earnings management motives,when the ban period is more than one year,the company has a positive signal of positive support for the company's reverse interest transfer and the use of positive real earnings management to pass the signal of excellent performance.3.Consistent with the conclusions of most scholars,the enterprise's accrued earnings management is inversely related to post-period performance.Unlike most studies,the results of this paper find that real earnings management has a positive correlation with post-performance.The companies with the positive real earnings management are truly high-performing companies and use real earnings management to pass on the positive signals of excellent performance.They also have the “support” motivation for the reverse interest transfer of the company through positive real earnings management.This paper studied the impact of the period of restricted sales of Private Placement stock shares on the earnings management methods and motives of enterprises who participated in Private Placement for the first time.It is found that although “interest transfer” is a general motivation for enterprises who participated in Private Placement to manage earnings,not all enterprises' motivations are like this.The length of the period of restricted sales of Private Placement stock,that is,the strength of the liquidity of the shares will affect the motivations of the earnings management of the enterprise.The enterprises with the restricted sales restriction period of more than one year have the “support” motivation of reverse interest transfer through the positive real earnings management.And the conclusions of the economic consequences of different earnings management methods indicate that the positive earnings management has passed a positive signal of excellent performance,and the enterprises who participated in the Private Placement that adopt positive real earnings management are excellent enterprises,and there is indeed a “support” motivation for reverse benefit delivery.Therefore,unlike most scholars' conclusions of "interest transfer"(Zhang Weidong,2010;Zhang Weidong,2011;Yan progress,2018),this paper believes that the "interest transfer" motivation(Johnson,2000)and the the “support” motivation(Friedman,2003),can coexist in the capital market although they are antagonistic theories.This article supports all of the theories including the "interest transfer" theory(Johnson,2000),the "support" of reverse interest transfer(Friedman,2003)and the "signal transmission"(Taylor et al.,2010;Gunny et al.,2010).