Earnings management of initial public offering firms: Evidence from regulation changes in China

Jianlei Liu, Konari Uchida, Ruidong Gao

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

Discretionary current accruals of Chinese initial public offering (IPO) firms decreased after the abolition of fixed-price offering systems that directly linked offering price to reported earnings. Results suggest IPO firms that decrease managerial ownership manage earnings upward during the fixed-price offering period, but this relationship disappeared after the introduction of a book-building system. We also find that bank debt is negatively related to discretionary current accruals during the fixed-price offering period, but no relation exists for the book-building period. Leverage has a significant positive relationship with earnings management. However, this finding is potentially attributable to nonoffering price objectives or endogeneity biases.

Original languageEnglish
Pages (from-to)505-537
Number of pages33
JournalAccounting and Finance
Volume54
Issue number2
DOIs
Publication statusPublished - Jan 1 2014

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Initial public offerings
Fixed price
Earnings management
China
Accruals
Bookbuilding
Bank debt
Managerial ownership
Leverage
Endogeneity bias

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)

Cite this

Earnings management of initial public offering firms : Evidence from regulation changes in China. / Liu, Jianlei; Uchida, Konari; Gao, Ruidong.

In: Accounting and Finance, Vol. 54, No. 2, 01.01.2014, p. 505-537.

Research output: Contribution to journalArticle

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