An Empirical Analysis of Earnings Management During the IPO Process: The Evidence from Manufacturing SMEs in China

IPO is an important means for the reform of state enterprises as well as capital allocation in the People´s Republic of China. The literature documents that IPO firm´s financial performance declines subsequent to IPO. In this paper, We use the Jones-CFO model to prove the hypothesis which is Form theories analysis and find the 52 sample companies have earnings management behavior which leads to bad performance after listing. Finally, this paper analyses the negative influence of earnings management and offer five policy suggestions combined with the real condition of our country. We hope these proposals can help avoid or control earning management in SMEs and keep away the risk of market, so that the SMEs Board can grow up healthily and stride forward Growth Enterprise Market (CEM) successfully.