Tunneling as an incentive for earnings management during the IPO process in China

• Main Authors: WANG, Jiwei, AHARONY, Joseph, YUAN, Hongqi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2010
• Subjects: Accounting; Finance and Financial Management; International Business; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/soa_research/196; https://ink.library.smu.edu.sg/context/soa_research/article/1195/viewcontent/Tunneling_as_an_incentive_for_earnings_management_during_the_IPO_process_in_China.pdf
• Institution: Singapore Management University

Using a sample of 185 Chinese IPO firms listed on the Shanghai Stock Exchange during the period 1999-2001, we show that related-party (RP) sales of goods and services could be used opportunistically to manage earnings upwards in the pre-IPO period. We also provide evidence that such behavior may be...