Earnings management of state-owned enterprises as a target: Evidence from China

28 Pages Posted: 22 Mar 2019

See all articles by Liping Dong

Liping Dong

Beijing Wuzi University

Konari Uchida

Kyushu University - Faculty of Economics

Yuyang Zhang

Kyushu University

Date Written: February 5, 2016

Abstract

We investigate earnings management of state-owned enterprises (SOEs) being a block trade target in China. Some block trades transfer control rights of SOEs to private parties (STP transactions) while others sell shares to another SOE (STS transactions). We find that SOEs manage earnings more upward in STP transactions than in STS transactions. Meanwhile, we find no evidence that SOEs charge higher prices when in STP than in STS. These results are consistent with the idea that target firms engage in earnings management especially when there is serious information asymmetry between bidders and targets.

Keywords: Earnings management; Discretionary accruals; Target companies; Block trade; China

JEL Classification: G34; G38

Suggested Citation

Dong, Liping and Uchida, Konari and Zhang, Yuyang, Earnings management of state-owned enterprises as a target: Evidence from China (February 5, 2016). Available at SSRN: https://ssrn.com/abstract=3344462 or http://dx.doi.org/10.2139/ssrn.3344462

Liping Dong (Contact Author)

Beijing Wuzi University ( email )

Chaoyang North Rd
Tongzhou, Beijing
China

Konari Uchida

Kyushu University - Faculty of Economics ( email )

6-19-1, Hakozaki
Higashi-ku
Fukuoka, Fukuoka 8128581
Japan

Yuyang Zhang

Kyushu University ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

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