Title: The Earnings Manipulation and the Corporate Financing Tools-Evidence from the Listed Companies in China
Abstract: Listed companies in China have strong incentive to manage earning upward by modulating discretionary accruals to gain the rights of exterior financing.This paper examines the correlation between earning manipulation and equity issues,change of retained earnings and debt issues,and leverage change.We construct the component of accruals using the cross-sectional of the modified Jones model by data of Chinese A-shares listed companies between year of 1999 and 2005.The evidence shows that listed corporations in China have the positive discretionary accruals before issuing equity and debt.We find the positive relation between discretionary accruals and equity issues and debt issues,and negative relation between discretionary accruals and change of retained earnings.We also find the positive relation between discretionary accruals and change of leverage because of integrative influence on capital structure by equity issues,change of retained earnings and debt issues.
Publication Year: 2007
Publication Date: 2007-01-01
Language: en
Type: article
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