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The Impact Of Fiscal Support On Earnings Management : Evidence From Equity Offerings In China, Guanming He

Theses & Dissertations

It is well documented in existing literature that firms manipulate earnings before IPOs (initial public offerings) and SEOs (seasoned equity offerings). This study contributes to prior research by being the first to examine whether fiscal support from local governments has impact on the earnings management behavior of Chinese listed firms. Using data from firms that conduct IPOs and SEOs from 1997 to 2006, I find that firms are less likely to manipulate earnings prior to the offerings if they enjoy more income tax savings attributed to the preferential tax favor or more financial subsidy from the local governments.

The findings …