LAUSR

In this study, we compare earnings management behaviour of Chinese public firms under public offerings and private placements. We find that, in the year before the issuance, public offerings firms exhibit more income-increasing earnings management than private placement firms. The result is opposite in the year after the issuance. We also find that, within private placements, firms that issued offerings to institutional investors exhibit higher income-increasing earnings management than firms that issued offerings only to non-institutional investors. These results suggest that firms manage earnings in response to regulatory requirements.