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Title: Earnings management in anticipation of privatization of listed state-owned-enterprises in the Chinese market
Other Titles: Zhongguo shang shi gong si min ying hua zhi qian de ying yu guan li yan jiu
Authors: Du, Jun (杜軍)
Department: Dept. of Accountancy
Degree: Doctor of Philosophy
Issue Date: 2006
Publisher: City University of Hong Kong
Subjects: Government business enterprises -- China -- Accounting
Privatization -- China
Surplus (Accounting)
Notes: CityU Call Number: HF5681.S93 D8 2006
Includes bibliographical references (leaves 80-84)
Thesis (Ph.D.)--City University of Hong Kong, 2006
vi, 87 leaves : ill. ; 30 cm.
Type: Thesis
Abstract: This study examines whether bureaucrats of Chinese-listed state-owned-enterprises (SOEs) manipulate earnings immediately before governments relinquish their control to private hands. It is very hard for private businesses to issue equity in the Chinese stock market. A typical way for a private entrepreneur to access the market is to acquire a listed SOE’s controlling shares, which are non-tradable in the market but can be transferred among institutions. In this situation, the floor of the transfer price is based on accounting numbers. I find that SOEs realize abnormally large income-decreasing earnings management compared with benchmark samples one year prior to privatization. This difference vanishes in other years around the privatization event. In addition, the negative earnings management preceding privatization reduces governments’ revenues and is negatively associated with earnings changes in subsequent years. These findings provide empirical support for the rent-seeking model of Shleifer and Vishny (1992, 1993) and suggest that earnings management should be considered in studies examining the effects of privatization programs. Keywords: Earnings management; Privatization; Rent-seeking
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