The Variables to the Approvals/Denials of Chinese SEOs and Private Placements
Date Issued
2012
Date
2012
Author(s)
Lee, Hsin-Ting
Abstract
This article infers the variables that may be adopted by Chinese SEC in the process of reviewing the SEO applications of firms and investigates the potential earnings management conducts of SEOs companies. Between 1997 and 2010, the companies successfully going through the processes of SEOs via Shanghai and Shenzhen Stock Exchange A shares tend to have more pronounced earnings management. Firms in the first-tier cities and the unprotected industries have higher degree of earnings management and also appear to be easier than the other firms to be approved. The companies that issue new shares to the related parties through private placements appeared to do manipulate their earning downward, thus they are alleged to lower the issue price. Finally, our tests comparing non-applicants and the granted SEOs companies show that latter group is with greater ROEs. Moreover, the applying companies tend to have abnormal discretionary accruals. In recent years, the result also shows that the granted companies manage their earnings downward.
Subjects
Earnings management
Return on equity
Seasoned equity offerings
Private placements
Type
thesis
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