IPO?Employee Compensation And Corporation Value

An initial public offering(IPO)is the first step for a company to enter the capital market.China's current securities issuance system is an approval system and has set a high threshold for IPO companies,especially the requirements for corporate profitability.Therefore,in the context of the IPO issuance regulation,companies will generate incentives for earnings management to meet the regulatory standards of the Securities and Futures Commission.For a long time,the issue of IPO earnings management has been a key topic discussed by scholars at home and abroad.Existing research literature shows that in addition to manipulating accrued profits,IPO companies will also use real activity earnings management to adjust profits.In the short term,real activity earnings management can indeed improve corporate profits,but in the long run,because profits are adjusted before the IPO,when the company is listed,this short-term control of profits may lead to a decline in corporate performance,which will damage corporate value.This paper explores whether IPO companies use employee wages for earnings management and analyzes the impact of IPO company employee salary levels on corporate value.First of all,this article takes 2015-2018 IPO companies as a research sample,and finds that the employees' salaries before the IPO are significantly lower than the average market salary,which shows that the phenomenon of enterprises trying to regulate employee salaries to achieve an IPO does exist.Secondly,the relationship between the employee's salary before the IPO and the value of the company after the listing is analyzed.The results show that the lower the employee's salary before the IPO,the lower the company's value after the IPO.Then,take Cisen Pharmaceutical Co.,Ltd as an example to conduct a case analysis,study the company's behavior of using employee compensation for earnings management when applying for an IPO,and analyze the impact on the company's value.Finally,it is concluded that when the company is IPO,it will reduce the employee's salary level as one of the means of enterprise earnings management,and then achieve the purpose of listing and affect the value of the company.The research in this paper can enrich the research on IPO,take employee compensation as the starting point,study the earnings management behavior of IPO companies,and providepolicy recommendations for investors' stock market investment,managerial enterprise operations,and supervisory supervision.