Essays on Chinese markets: Government regulation, managerial behavior and market consequence.

摘要

Whether securities markets need regulations has been debated for many years. As one of the largest emerging markets in the world, the Chinese market is highly regulated and regulations are changing. Therefore, it is an ideal setting to investigate how government regulation affects the securities market development.; Chapter 2 focuses on the regulatory framework related to IPOs. It finds that the pricing regulations that require IPO firms to price new shares based on the accounting earnings might have induced IPO firms to inflate the pricing-related earnings. Such opportunistic behavior during the IPO process may be the cause of the large decline in post-IPO profitability. On the other hand, the penalty regulations against overoptimistic earnings forecast might have deterred IPO firms from making aggressive forecast and decreased the use of earnings management. First-day stock returns and long-run stock returns are significantly worse for IPO firms that report unusually good pricing-related earnings or make overoptimistic earnings forecast. This chapter, therefore, documents significant impacts of government regulations on the performance of Chinese IPOs.; Chapter 3 examines a couple of contentious issues on earnings announcement timing in a unique setting under the Chinese regulatory environment. Since fiscal 2001, Chinese firms have been required to disclose in advance their expected annual report dates. An unusually large number of firms choose to release annual reports near the end of the 4-month reporting season. This chapter finds that investors rationally interpret early (late) schedules as good (bad) news and react positively (negatively) to firms that release early (late) schedules. It next examines why so many Chinese firms report annual earnings very late although investors perceive late schedules as bad news. This chapter find that late firms report more non-operating income than others and the excessive non-operating income is unexpected by investors, suggesting that the excessive non-operating income reported by late firms is opportunistic and likely to be due to earnings management. This chapter concludes that one possible motivation behind firms' decisions to report earnings late is that these firms need more time to manage earnings.