مقاله انگلیسی رایگان در مورد ارتباطات سیاسی سرمایه گذاری و مدیریت سود IPO – الزویر 2018

We examine the external monitoring effects of venture capitalists (VCs) on IPO firms’ accrual and real earnings management (EM) in the largest transitional and emerging market, China. The results show government-controlled VCs are most associated with IPO firms who ‘window-dress’ accrual and real earnings, have poorer long-run stock performance and most likely to exit immediately after VC share lock-up expiration. In contrast, privately owned VCs with management-level political connections are associated with IPOs exhibiting the lowest level of EM. Prior research shows companies manage their earnings to improve short-term performance around IPOs (Teoh et al., 1998a, 1998b). However, recent developed market studies reveal managers’ discretion is affected by the presence of VC investors (Cummings et al., 2007), and VC-backed IPOs, especially those backed by reputable VCs, have significantly lower EM and better post-IPO performance than non-VC-backed IPOs (e.g., Morsfield and Tan, 2006; Lee and Masulis, 2011; Wongsunwai, 2013). In emerging markets where government intervention is still prevalent, political connections facilitate political rent seeking and access to valuable resources (e.g., Liu et al., 2013; Li and Zhou, 2015). Further, politically connected VCs enjoy greater number of successful exits than their non-connected counterparties (Cao et al., 2013; Anderson et al., 2017). Consequently, we examine whether politically connected VCs constrain IPO-year EM, or whether these VCs simply obtain their ‘more reputable’ status through their connections facilitating successful exits rather than providing monitoring roles in a transitional market. VCs in China are typically either government controlled and therefore have ownership-level political connections, or alternatively have management-level political connections through their executives (Liu et al., 2013). Although government controlled VCs have better access to private information and resources, significant government ownership may lead to inefficiency and po litically motivated decisions (Okhmatovskiy, 2010; Cao et al., 2013). In addition, their uncompetitive compensation packages make it difficult to attract and retain top managers1 (Chen et al., 2013a; PE Daily, 2013). On the other hand, private politically connected VCs obtain benefits of political ties while maintaining greater autonomy of selecting and advising companies. Top managers or general partners2 of privately owned VCs are often founders or shareholders and as such more likely to be concerned with the long-term success of their VC firms. For these reasons, VCs with different types of political connections (ownership- versus management-level connections) face different incentives with respect to monitoring EM decisions of IPO issuers. The booming Chinese VC market, with its divergent ownership structure and government intervention, allows us to investigate the impact of different VC investors on earnings quality and, in turn, post-IPO performance.