Research on Earnings Management of IPO Companies in GEM Board
|School||Nanjing University of Aeronautics and Astronautics|
|Keywords||GEM motivation of finacing earnings management IPO underpricing policysuggestions|
The Growth Enterprise Market (GEM) of China came into being on October30,2009, whichmeant we’ve built the multi-level capital market system consisted of motherboard market、SMEmarket、GEM market and foreign market. At the same time, the GEM market provides a new directfinancing platform for the SMEs. No matter the quantities or the value they create, the SMEs play asignificantly important role in the national economics; however, most of them always encounterfinancing bottleneck and are deeply lost in the the financing dilemma.In order to get the opportunityof financing and listing on the GEM, whether the SMEs will have the behavior of earningsmanagement in the process of IPO? And what’s the relationship between earnings management andIPO underpricing? With these doubts, this paper takes listed companies on the GEM during2009-2011as research samples and carries out the relevant research.First of all, this paper introduces the backgrounds、meanings and the current researches both athome and abroad. Meanwhile, the paper researches the basic theory of earnings management of IPOcompanies on the GEM and focuses on analysising their motivation of earnings management.With theempirical research, this paper takes the281companies listed on the GEM Board as research samples,uses the Van Horn model、Jones-CFO model and IPO underpricing regression model to verify thefinancial needs motivation、the existence of earnings management behavior in the IPO process and therelationship between the level of earnings management and IPO underpricing. The research showsthat: the actual growth rate is higher than SGR significantly in the current year and two years beforethe companies list on the GEM, which means that these companies have a great motivation offinancial needs; in the IPO process, companies listed on the GEM take earnings managementsignificantly and there is a positive correlation between earnings management and IPOunderpricing.Finally, in order to perfect the IPO process of GEM board, this paper puts forward somepolicies from three aspects: broaden the financial way to satisfy the capital needs of the SMEs;improve the intern governance structure and build the intern restriction mechanism; reduce theincentive of earnings management and create a good invest atmosphere.