Go public is one way of the companies (the company is still being
developed) to obtain additional funds in order to finance the business expansion.
Therefore, in order for the offered-shares to be absorbed by the market, the owner
of the company is required to be able to show that his company has prospects.One
of the requirements set by the capital market supervisor for a company that will
conduct an initial public offering (IPO) is a prospectus document (Gumanti,
2000). The prospectus contains information about the securities issuer company
and other information relates to the securities sold (Hartono, 2000). The limited
information that is disclosed in the prospectus will also lead to an imbalance of
information. The imbalance of information that owned by the company with the
outside parties can be referred as asymmetric information.Asymmetric
information that occurs between agents and principal can lead to an opportunity
for agents to do earnings management in the company, because with the more
agent has the information than principal, then the agent can easily manipulate the
information in the company. From that situation, earnings management will occur.
This research is intended to examine whether earnings management before
and after the Initial Public Offering has significant changes or not and prove that
empirically earnings management higher before the Initial Public Offering, or it
can be said that earnings management is lower after the Initial Public
Offering.This research is done in all companies that in the year 2009-2014 has
conducted the Initial Public Offering (IPO).
The result of this research shows thatearnings management after the Initial
Public Offering is lower after the Initial Public Offering. Companies tend to
perform earnings management lower after the IPO, because the company does not
want the investors know if the company performs earnings management.