Earnings management practices of companies in the ipoprocess: A research on BIST (Istanbul Stock Exchange) manufacturing industry

Initial public offering (IPO), the method of meeting the capital needs of companies, has played an important role in the development of capital markets since the 20th century. Various studies have been carried out in the literature on enterprises that have initial public offering. These studies concentrated on companies' short, medium and long-term price/performance and their low or high IPO value. The determination of the company's value before the IPO is carried out with investment banks or valuation companies. Valuation companies benefit from a market and accounting-based evaluation approach when determining the value of the relevant company. The earnings per share and the average profit can be expressed as examples of accounting-based evaluations. The use of such valuation approaches will bring the company's reported earnings to the forefront. Thus, it causes managers to want to make transactions that increase the company's earnings by using specific accounting policies, since more reported earnings will increase the company's value and the income from the IPO. In this study, the earnings management practices of 31 companies operating in the BIST (Istanbul Stock Exchange) Manufacturing Industry, which has IPO between 2010-2015, were investigated. In the study, the Jones Model and the models for developing the Jones model were used to determine earnings management.