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)


    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
    Issue number2
    Publication statusPublished - 2014



    • Bank loan
    • China
    • Earnings management
    • Fixed-price offering system
    • Initial public offerings process

    ASJC Scopus subject areas

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

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