This research examines the relationship between pre-IPO earnings management (measured by discretionary accruals) and initial firm value as well as the relationship between earnings management and post-IPO firm's performance (measured by post-IPO firm' cummulative stock return). Firms make earnings management prior to IPO because an informational asymmetry exists between managers and investors. Generally, there is little publicly available information about firms at the time of IPO other than that contained in their offering prospectuses. There are two perspectives of earnings management: informational perspective and opportunistic perspective. When earnings management is used as a tool to state their future cash flows expectation to investor, it is an informational perspective; but when earnings management is used as a tool to make inaccurate (misleading) earnings information so that investors can not make right valuation about the risk of the firm, it is an opportunistic perspective. This study shows that the relationship between discretionary accruals in pre-IPO period and initial firm value is significantly positive. It indicates that an informational asymmetry exists between the manager taking his firm going public and potential investors. Under these conditions an incentive may arise for firms to manipulate, or, manage, reported earnings. This study does not provide evidence that there is a relationship between discretionary accruals and firm's post-IPO stock return. Consequently, this stud y can not show that earnings management prior to IPO is informational perspective or opportunistic perspective. Key Words: Initial Public Offering, Discretionary Accruals, Initial Firm Value, Information Asymmetry, Informational Perspective, and Opportunistic Perspective.