Research On Earnings Management In High-level Private Placement In Pharmaceutical Industry

In the increasingly competitive environment,private placement has become a common equity financing method in the capital market.It is favored by listed companies because of its lower issuance cost and threshold.With the promulgation of the new refinancing regulations in 2020,the restrictions on private placement are relaxed and the popularity has resumed,which is expected to promote the scale of equity refinancing again.However,most of the existing cases and literatures analyze the benefit transfer behavior of large shareholder related parties through low-priced additional issuance,and there are not many research cases of private placement when the stock price is high.In addition,earnings management problems are not uncommon in today’s capital market.Earnings management usually has a signaling effect,and positive earnings management releases positive signals.In order to successfully complete the private placement,listed companies always associate earnings management with private placement.From the investor’s point of view,this is also the focus of identifying the investment risks of private placement.This paper selects the listed company Betta Pharmaceuticals as the research object,and analyzes the case of using positive earnings management methods to affect the stock price in 2020 and realizing private placement when the stock price is high.By expounding the whole process of private placement,studying the motivation of private placement,the means of earnings management and the market response,and the influence of private placement on market performance and business performance,which will bring some inspiration to investors and the market.It also provides some advice to market regulators.The study found that Betta Pharmaceuticals used positive earnings management methods to influence the stock price to meet the expected issuance pricing before the high-level private placement,thereby promoting the smooth implementation of the private placement plan;high-level private placement can bring announcement effects,and with the promulgation of the plan and the advancement of the private placement process,investors will be optimistic about the current performance of the company,which will be reflected in the secondary market directly through the stock price;in the short term after the completion of the private placement,the stock price will be stabilized by continuously releasing good news,and the major shareholders will sell stocks at the high point of the stock price.Profits from holding reductions and cashing out damage the rights and interests of small and medium shareholders.The results of this study show that the high-level private placement brought by raising the stock price through earnings management methods lacks performance support,and it is difficult to maintain long-term sustainable growth in stock prices and fundamental improvement in performance.The research in this paper hopes to help relevant departments regulate the capital market order,improve related systems,and make market participants more rational.Make investment and financing strategies to better protect the rights and interests of investors.