This paper aims to conduct a comparative study of earnings management practice in the Initial Public Offerings (IPOs) of firms in China and Thailand. These countries belong to two different institutional backgrounds. China has transformed economy, it has a planned economy, specifically, the Socialist Market Economy with Chinese Characteristics. Meanwhile, Thailand had a mixed economy and experienced the fearful financial crisis with a heavy cost. Taking into consideration these characteristics, the predictions are that the magnitude and direction of earnings management practice are different between China and Thailand. The statistical analysis has been used on Chinese and Thailand IPOs’ firm-year observations during 2007-2016, to examine the difference of earnings management in IPOs’ firms. This paper uses a robust regression method to estimate discretionary accruals of IPOs' firms. The comparison is using the independent samples t-test and the Wilcoxon rank-sum (Mann-Whitney) test. The results are consistent with the predictions. Thai firms report higher positive and greater negative earnings management than Chinese firms and the earnings management magnitude is more prominent in Thai firms than Chinese firms.
Earnings Management, Discretionary Accruals, IPOs, China, Thailand