Tunneling as an Incentive for Earnings Management During the Ipo Process in China

• Main Authors: Aharony, Joseph, Yuan, Hongqi, WANG, Jiwei
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2006
• Subjects: Related party transactions; Earnings management; Tunneling; Initial public offering; Finance and Financial Management; International Business; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/soa_research/219
• Institution: Singapore Management University

Using a sample of 185 Chinese IPO firms listed on the Shanghai Stock Exchange during the period 1999 to 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...