State ownership and earnings management around initial public offerings: Evidence from China

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16 Citations (Scopus)


This study investigates earnings management by firms around their initial public offerings (IPOs) in domestic Chinese equity markets. Using a sample of 437 IPO firms, we find that Chinese firms tend to inflate earnings around their IPOs. We also show that state-owned enterprises (SOEs) manage earnings to a lesser degree than non-state-owned enterprises (NSOEs) do around IPOs. Furthermore, using path analysis, we find that two incentive factors, CEO shareholding and accessibility to bank loans, explain 48 percent of the correlation between state ownership and earnings management for IPO firms. In particular, accessibility to bank loans is a more important incentive factor that leads to less earnings management for SOEs than NSOEs.
Original languageEnglish
Pages (from-to)89-116
Number of pages28
JournalJournal of International Accounting Research
Issue number2
Publication statusPublished - 1 Sep 2015


  • Earnings management
  • Initial public offering
  • State-owned enterprises

ASJC Scopus subject areas

  • Business and International Management
  • Accounting

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