Study on the Problems of Earnings Management of Listed Companies on GEM in China
|School||Jiangsu University of Science and Technology|
|Keywords||listed company GEM Earnings Management modified Jones model|
After repeated setbacks，Growth Enterprise Market(GEM) which aimed for innovativesmall-medium enterprise(SMEs) was finally launched in October2009. It is very importantfor promoting the development of SMEs, for independent innovation and for facilitating thereorganization of industrial structure. Also it plays an important role in the development ofChinese economy. The main point of this paper is that it focuses on whether there isearnings management in the new board such as things happened in the mother board andSmall Business Market.The practice and research both inside and outside the country show that the innovationand earnings growth was the core of healthy development of GEM. According to “ChineseGrowth Enterprise Market Issuing Management Approach”, there are requirements on theminimum profitability and earnings growth rate to companies be listed in GEM. We shouldpay attention to the authentic earnings growth, in order to prevent it from manipulating. Forearnings management will distort the accounting information of companies listed on GEM,intensify asymmetric information among various stakeholders, and mislead valuablejudgment of the regulator institutions and outside investors which finally do no favor to thedevelopment of GEM.In this context, this article selects the listed companies of GEM as research objects,adopts normative research and empirical research, combining the lasted data to studyearnings management behavior which may happen in GEM. Firstly, it introduces thetheoretical background of the earnings management behavior from the theories view toillustrate it’s economic reason and motivation. Secondly, it introduces some theories relatedto the system of GEM, which include issue system, information disclosure system anddelisting system. Also it introduces some unique earnings management means. Thirdly,from the empirical view, it selects181GEM companies, using the modified cash flowJones model to implement quantitative analysis.The article concludes the basic conclusion as follows: modified cash flow Jones modelperformance better than modified Jones model in testing earnings management. And thelisted company will conduct earnings management when in GEM. Moreover, the growthrate will develop behaviors of earnings management of listed companies.