Rights issues in the Chinese stock market: Evidence of earnings management

Hung Gay Fung, Wai K. Leung, Jiang Zhu

Research output: Journal PublicationArticlepeer-review

9 Citations (Scopus)


Using 665 rights offerings of Chinese firms, we demonstrate positive but diminishing price effects of successive announcements at the board meeting, the shareholders' meeting, the prospectus release date, and the ex-rights date, but negative abnormal returns before the ex-rights date. Public investors value the participation from shareholders of state and legal-person shares in the rights offerings, which seem to be linked to the future firm performance. The results overall supports the hypothesis that Chinese company earnings are considerably manipulated in the rights issue process.

Original languageEnglish
Pages (from-to)133-160
Number of pages28
JournalJournal of International Financial Management and Accounting
Issue number2
Publication statusPublished - Jun 2008
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance


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