Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing

Bai Yinghui; Xiong Yuanyuan; Wang Binru

doi:doi:10.11648/j.jim.20150405.23

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Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing

Bai Yinghui, Xiong Yuanyuan, Wang Binru

Published in Journal of Investment and Management (Volume 4, Issue 5)

Received: 21 July 2015 Accepted: 6 August 2015 Published: 13 August 2015

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Abstract

This paper investigates the action、the motivation and the character of earnings management in the process of IPO using a sample of 281 IPO firms in the Growing Enterprise Market(GEM) of A-share market of Shenzhen Stock Exchange during 2009~2011. First, the evidence result shows that these listed companies revise earnings upwards in the year of issuance, while revise earnings downwards in the first year of post-IPO. Second, there is a significant correlation between these listed companies’ initial offering prices and the level of earnings management which illustrate one of the motivations of earnings management is the high initial offering price, even though this correlation between them is weak. Third, the level of earnings management of those listed companies who belong to manufacturing industry is less than that of those listed companies who don’t belong to manufacturing industry in the year of issuance.

Published in	Journal of Investment and Management (Volume 4, Issue 5)
DOI	10.11648/j.jim.20150405.23
Page(s)	228-236
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Earnings Management, GEM, IPO, Initial Offering Price

References

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[4]	Christian Laux, Volker Laux．Board Committees, CEO Compensation, and Earrings Management[J]．The Accounting Review,2009,vol.84,No.3:869-891
[5]	Douglas F. Prawitt, Jason L. Smith, David A. Wood．Internal Audit Quality and Earnings Management[J]．The Accounting Review,2009,vol.84,No.4:1255-1280
[6]	Victor S. Maas, Michal Matejka．Balancing the Dual Responsibilities of Business Unit Controllers: Field and Survey Evidence[J]．The Accounting Review,2009,vol.84,No.4:1233-1253
[7]	Kiridaran Kanagaretnam, Gopal V. Krishnan, Gerald J. Lobo．Balancing the Dual Responsibilities of Business Unit Controllers: Field and Survey Evidence[J]．The Accounting Review,2009,vol.84,No.4:1233-1253
[8]	Patricia M. Dechow, Richard G. Sloan, Amy P. Sweeney．Detecting earnings management[J]．The Accounting Review,1995,vol.70,No.2:193-225
[9]	Stephen R. Stubben．Discretionary Revenues as a Measure of Earnings Management[J]. The Accounting Review,2010,vol.85,No.2:637-717
[10]	Sharon P. Katz．Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors[J]．The Accounting Review,2009,vol.84,No.3:623-658
[11]	De Fond, M., and J. Jiambalvo. 1994. Debt covenant violation and manipulation of accruals[J]. Journal of Accounting and Economics 17: 145–176.
[12]	Bernard, V., and D. Skinner. 1996. What motivates managers’ choice of discretionary accruals[J]? Journal of Accounting and Economics 22: 313–325.

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APA Style

Bai Yinghui, Xiong Yuanyuan, Wang Binru. (2015). Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing. Journal of Investment and Management, 4(5), 228-236. https://doi.org/10.11648/j.jim.20150405.23

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ACS Style

Bai Yinghui; Xiong Yuanyuan; Wang Binru. Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing. J. Invest. Manag. 2015, 4(5), 228-236. doi: 10.11648/j.jim.20150405.23

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AMA Style

Bai Yinghui, Xiong Yuanyuan, Wang Binru. Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing. J Invest Manag. 2015;4(5):228-236. doi: 10.11648/j.jim.20150405.23

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@article{10.11648/j.jim.20150405.23,
  author = {Bai Yinghui and Xiong Yuanyuan and Wang Binru},
  title = {Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing},
  journal = {Journal of Investment and Management},
  volume = {4},
  number = {5},
  pages = {228-236},
  doi = {10.11648/j.jim.20150405.23},
  url = {https://doi.org/10.11648/j.jim.20150405.23},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20150405.23},
  abstract = {This paper investigates the action、the motivation and the character of earnings management in the process of IPO using a sample of 281 IPO firms in the Growing Enterprise Market(GEM) of A-share market of Shenzhen Stock Exchange during 2009~2011. First, the evidence result shows that these listed companies revise earnings upwards in the year of issuance, while revise earnings downwards in the first year of post-IPO. Second, there is a significant correlation between these listed companies’ initial offering prices and the level of earnings management which illustrate one of the motivations of earnings management is the high initial offering price, even though this correlation between them is weak. Third, the level of earnings management of those listed companies who belong to manufacturing industry is less than that of those listed companies who don’t belong to manufacturing industry in the year of issuance.},
 year = {2015}
}

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TY  - JOUR
T1  - Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing
AU  - Bai Yinghui
AU  - Xiong Yuanyuan
AU  - Wang Binru
Y1  - 2015/08/13
PY  - 2015
N1  - https://doi.org/10.11648/j.jim.20150405.23
DO  - 10.11648/j.jim.20150405.23
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 228
EP  - 236
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20150405.23
AB  - This paper investigates the action、the motivation and the character of earnings management in the process of IPO using a sample of 281 IPO firms in the Growing Enterprise Market(GEM) of A-share market of Shenzhen Stock Exchange during 2009~2011. First, the evidence result shows that these listed companies revise earnings upwards in the year of issuance, while revise earnings downwards in the first year of post-IPO. Second, there is a significant correlation between these listed companies’ initial offering prices and the level of earnings management which illustrate one of the motivations of earnings management is the high initial offering price, even though this correlation between them is weak. Third, the level of earnings management of those listed companies who belong to manufacturing industry is less than that of those listed companies who don’t belong to manufacturing industry in the year of issuance.
VL  - 4
IS  - 5
ER  -

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Author Information

Bai Yinghui

Xinglin School, Nantong University, Nantong, China
Xiong Yuanyuan

Bank of Jiangnan, Changzhou, China
Wang Binru

School of Business, Nantong University, Nantong, China

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APA Style

Bai Yinghui, Xiong Yuanyuan, Wang Binru. (2015). Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing. Journal of Investment and Management, 4(5), 228-236. https://doi.org/10.11648/j.jim.20150405.23

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ACS Style

Bai Yinghui; Xiong Yuanyuan; Wang Binru. Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing. J. Invest. Manag. 2015, 4(5), 228-236. doi: 10.11648/j.jim.20150405.23

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AMA Style

Bai Yinghui, Xiong Yuanyuan, Wang Binru. Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing. J Invest Manag. 2015;4(5):228-236. doi: 10.11648/j.jim.20150405.23

Copy | Download

@article{10.11648/j.jim.20150405.23,
  author = {Bai Yinghui and Xiong Yuanyuan and Wang Binru},
  title = {Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing},
  journal = {Journal of Investment and Management},
  volume = {4},
  number = {5},
  pages = {228-236},
  doi = {10.11648/j.jim.20150405.23},
  url = {https://doi.org/10.11648/j.jim.20150405.23},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20150405.23},
  abstract = {This paper investigates the action、the motivation and the character of earnings management in the process of IPO using a sample of 281 IPO firms in the Growing Enterprise Market(GEM) of A-share market of Shenzhen Stock Exchange during 2009~2011. First, the evidence result shows that these listed companies revise earnings upwards in the year of issuance, while revise earnings downwards in the first year of post-IPO. Second, there is a significant correlation between these listed companies’ initial offering prices and the level of earnings management which illustrate one of the motivations of earnings management is the high initial offering price, even though this correlation between them is weak. Third, the level of earnings management of those listed companies who belong to manufacturing industry is less than that of those listed companies who don’t belong to manufacturing industry in the year of issuance.},
 year = {2015}
}

Copy | Download

TY  - JOUR
T1  - Does Earnings Management Reflect Real Condition of Listed Companies or It Does Whitewashing
AU  - Bai Yinghui
AU  - Xiong Yuanyuan
AU  - Wang Binru
Y1  - 2015/08/13
PY  - 2015
N1  - https://doi.org/10.11648/j.jim.20150405.23
DO  - 10.11648/j.jim.20150405.23
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 228
EP  - 236
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20150405.23
AB  - This paper investigates the action、the motivation and the character of earnings management in the process of IPO using a sample of 281 IPO firms in the Growing Enterprise Market(GEM) of A-share market of Shenzhen Stock Exchange during 2009~2011. First, the evidence result shows that these listed companies revise earnings upwards in the year of issuance, while revise earnings downwards in the first year of post-IPO. Second, there is a significant correlation between these listed companies’ initial offering prices and the level of earnings management which illustrate one of the motivations of earnings management is the high initial offering price, even though this correlation between them is weak. Third, the level of earnings management of those listed companies who belong to manufacturing industry is less than that of those listed companies who don’t belong to manufacturing industry in the year of issuance.
VL  - 4
IS  - 5
ER  -

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