Research On The Earnings Management Around Seasoned Equity Offerings

On May 8,2006,our country issued the file management method about SEO,making this way of financing enter into the public view.As a new way of refinancing,it has less financing restrictions and lower cost.Comparing with other ways of raising money,seasoned equity offerings have a lot of advantages.For example,there are fewer restrictions on the issuance of private placement,and the cost is relatively low,and it has relatively simple approval procedures.However,the external market environment in China is not mature and the corporate governance structure and mechanism of protecting minority shareholders' interests are not perfect,so this financing way is faced with a lot of problems.To some extent,it has become a way for big shareholders to gain profit for themselves,so SEO cannot play its role in some cases.And because there are a lot of purposes of SEO and there is a difference between the target of subscription and the way of subscription,so there is room for listed companies to do earnings manipulation in SEO.This paper uses the empirical research method to study the earnings management in the process of SEO.Referring to the theory from domestic and foreign,this paper studied the existence of the earnings management in SEO,the influencing factors of the earnings management and the economic consequences of SEO.At the same time,this paper studied the difference among different issuance object in earnings management.The empirical results show that:(1)There are earnings management activities in the SEO of listed companies,and there are usually accrual manipulation and real earnings manipulation in the process.(2)When issuing to big shareholders who subscribe for shares in cash,the listed companies tend to implement negative manipulation activities.When issuing to big shareholders who subscribe for shares in asstes,the listed companies tend to implement positive manipulation activities.When issuing to big shareholders who subscribe for shares in both cash and assets,there is no obvious manipulation activities.When only issuing to institutional investors,there exists positive earnings manipulation activities.(3)The degree of earnings manipulation in SEO is related to the shareholding ratio of first major shareholder,enterprise property,audit quality,the proportion of executives shareholding and the proportion of the independent board member.(4)The earnings management in SEO has negative impact on listed companies' operating performance.Finally,based on the empirical results,this paper puts forward some suggestions on policy system,regulatory environment and corporate governance in order to make SEO fully play its positive role.