Abstract
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 language | English |
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Pages (from-to) | 89-116 |
Number of pages | 28 |
Journal | Journal of International Accounting Research |
Volume | 14 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1 Sept 2015 |
Keywords
- Earnings management
- Initial public offering
- State-owned enterprises
ASJC Scopus subject areas
- Business and International Management
- Accounting