Title: Earnings management under public offerings and private placements: evidence from China

Authors: Li Dang; Sijing Yang

Addresses: Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA 93407, USA ' School of Business, Xiangtan University, Xiangtan, Hunan Province, 411105, China

Abstract: In this study, we compare earnings management behaviour of Chinese public firms under public offerings and private placements. We find that, in the year before the issuance, public offerings firms exhibit more income-increasing earnings management than private placement firms. The result is opposite in the year after the issuance. We also find that, within private placements, firms that issued offerings to institutional investors exhibit higher income-increasing earnings management than firms that issued offerings only to non-institutional investors. These results suggest that firms manage earnings in response to regulatory requirements.

Keywords: earnings management; public offerings; private placements; institutional investors.

DOI: 10.1504/IJBIR.2018.094201

International Journal of Business Innovation and Research, 2018 Vol.17 No.1, pp.112 - 127

Received: 27 Apr 2016
Accepted: 29 May 2017

Published online: 31 Jul 2018 *

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