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Do Venture Capitalists Constrain Or Encourage Earnings Management In Initial Public Offerings
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Book Synopsis Do Venture Capitalists Constrain or Encourage Earnings Management in Initial Public Offerings by : Suzanne G. Morsfield
Download or read book Do Venture Capitalists Constrain or Encourage Earnings Management in Initial Public Offerings written by Suzanne G. Morsfield and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether venture capitalists (VCs) provide value-added monitoring by constraining IPO-related earnings management in their portfolio firms. Finance theoretical literature is mixed as to its characterization of whether venture capitalists reduce principal-agent conflicts through their unique contracting, information collection, monitoring, and support skill/opportunity sets, or whether VCs have incentives to exploit their unique skills and proximity to firm management at the expense of other investors. Little empirical research has focused to date on identifying observable and measurable tests of specific elements of the perceived VC governance skills or incentives set on the actual market value of the firms in their investment portfolios. Earnings management around an IPO is a context where we may be able to both observe and quantify the impact of these perceived skills and incentives. Consistent with the current accounting theory of earnings management detection, we focus on a specific capital markets context where the use of inappropriate earnings-increasing discretionary accruals is expected - i.e., the initial public offering (IPO) setting. We find evidence that abnormal discretionary accruals are significantly lower and that long-run returns are significantly higher for VC-backed IPO firms relative to a matched sample of non-VC-backed IPO firms - these findings suggest that VCs behave more like principals than agents in this context. We also provide evidence that the direction of the discretionary accruals (i.e., income-increasing versus income-decreasing) is important when attempting to understand both the presence and determinants of earnings management in an IPO context. When positive and negative accruals are examined separately, VC presence is related to lower income-increasing discretionary accruals. We find no association between VC presence and income-decreasing accruals. Our results are robust to alternative variable specifications, and to controls for IPO market cycles and IPO lockup provisions.
Book Synopsis Earnings Management and Reputation of Venture Capitalists by : Wei Luo
Download or read book Earnings Management and Reputation of Venture Capitalists written by Wei Luo and published by . This book was released on 2006 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate whether earnings management in venture-capital-backed IPO firms has any consequence on reputation of venture capitalists. I document that discretionary accruals in the IPO year are negatively related to the number of new IPOs backed by the same lead venture capitalist during the lockup period, the number of new IPOs during the first year after the lockup period, and the number of new IPOs during the second year after the lockup period. In addition, I find that if there is income-increasing earnings management in the IPO year, underpricing is greater for the new IPOs backed by the same lead venture capitalist in the first year after the expiration of lockup period. But there is no significantly positive relationship between the discretionary accruals in the IPO year and the underpricing of new IPOs backed by the same lead venture capitalist in the second year after the expiration of lockup period. Overall, I find some evidence that earnings management imposes costs on lead venture capitalists.
Book Synopsis Incentives and Opportunities for Earnings Management in Initial Public Offerings by :
Download or read book Incentives and Opportunities for Earnings Management in Initial Public Offerings written by and published by . This book was released on 1994 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Do Venture Capitalists Influence the Decision to Manage Earnings in Initial Public Offerings? by : Christine E.L. Tan
Download or read book Do Venture Capitalists Influence the Decision to Manage Earnings in Initial Public Offerings? written by Christine E.L. Tan and published by . This book was released on 2006 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior studies suggest that VCs play a monitoring role. We predict and find that IPO-year abnormal accruals are lower in the presence of VCs for a sample of 2630 IPO firms during 1983-2001. Our findings are robust to controls for the endogenous choice of VC financing. We consistently find that the VC effect holds even when controlling for IPO lock-up provisions, VC partial cashing out subsequent to the IPO, and alternative proxies for earnings management. In addition, our findings do not support the claims of critics that VCs inflated earnings during the internet IPO bubble. Finally, we provide some evidence that the lower earnings management associated with VC monitoring partially explains the superior post-IPO returns of VC-backed firms.
Download or read book The IPO Decision written by Jason Draho and published by Edward Elgar Publishing. This book was released on 2004-01-01 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annotation Initial public offerings (IPOs) garnered unprecedented positive attention in the 1990s for their spectacular returns and central role in entrepreneurial activity. Subsequent revelations of unscrupulous IPO allocation and promotion practices cast a less fa.
Book Synopsis The Oxford Handbook of Entrepreneurial Finance by : Douglas Cumming
Download or read book The Oxford Handbook of Entrepreneurial Finance written by Douglas Cumming and published by OUP USA. This book was released on 2012-03-22 with total page 937 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a comprehensive picture of issues dealing with different sources of entrepreneurial finance and different issues with financing entrepreneurs. The Handbook comprises contributions from 48 authors based in 12 different countries.
Book Synopsis Incentives and Opportunities for Earnings Management in Initial Public Offerings by : Siew Hong Teoh
Download or read book Incentives and Opportunities for Earnings Management in Initial Public Offerings written by Siew Hong Teoh and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines accounting earnings and the associated accrual and cash flow components in the years surrounding an initial public offering (IPO) to study the incentives and opportunities for firms to manage earnings when going public. We identify firm and offering characteristics that may be related to the amount of earnings management in IPO firms. We find that age and ownership retention by original entrepreneurs are significantly negatively related to industry-adjusted discretionary accounting accruals. In addition, we find that net income and cash flow from operations increase in the fiscal year prior to the IPO, and decline significantly in the year of the IPO. Net income continues to decline subsequently but not cash flows. Discretionary working capital and total accruals in the year of the IPO are negatively related to future cash flows and the change in net income between the pre-and post-IPO period. Taken together, the evidence is consistent with a scenario where firms either time an IPO immediately after a year of unusually high cash flow or boost cash flows right before the IPO, and then use accounting accruals to sustain reported net income in the year of the IPO. Thus, the evidence is consistent with the IPO firm attempting to manage investor perceptions with discretionary accruals.
Book Synopsis Earnings management and the Long-term market performance of initial public offerings.Working Paper #9401-29 by : Siew Hong Teoh,T.J.Wong,Gita R. Rao
Download or read book Earnings management and the Long-term market performance of initial public offerings.Working Paper #9401-29 written by Siew Hong Teoh,T.J.Wong,Gita R. Rao and published by . This book was released on 1994 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Venture Capital and Earnings Management in IPOs by : Sabrina Ozawa Gioielli
Download or read book Venture Capital and Earnings Management in IPOs written by Sabrina Ozawa Gioielli and published by . This book was released on 2013 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate earnings management (EM) in IPOs and the role of private equity/venture capital (PEVC) in hampering such practice. We show that in terms of EM, PEVC and non-PEVC-sponsored firms should be treated as different samples: when we split the sample, R-squared increases drastically for both subsamples. EM in PEVC-sponsored IPOs is marginal while in non-PEVC-sponsored ones it is large. For PEVC-sponsored IPOs, the phases of the IPO are only marginally significant to explain EM while firms' characteristics are highly statistically significant. In contrast, for non-PEVC-sponsored ones, the phases of the IPO are highly statistically significant and firms' characteristics are only marginally statistically significant. Finally, only for PEVC-sponsored IPOs the reputation of the auditor is important to explain EM. This suggests that either auditors are more effective to control EM in those firms or, alternatively, that the choice of auditor is more meaningful for PEVC-sponsored firm, suggesting that the choice of a highly reputed auditor is a compromise not to manage earnings.
Book Synopsis The Effects of Venture Capital Involvement on Earnings Management and the Long-Term Market Performance: Evidence from IPO Firms in Taiwan by :
Download or read book The Effects of Venture Capital Involvement on Earnings Management and the Long-Term Market Performance: Evidence from IPO Firms in Taiwan written by and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A Comparative Analysis of Real and Accrual Earnings Management Around Initial Public Offerings Under Different Regulatory Environments by : Mohammad Alhadab
Download or read book A Comparative Analysis of Real and Accrual Earnings Management Around Initial Public Offerings Under Different Regulatory Environments written by Mohammad Alhadab and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: While earnings management around IPOs has been researched in a number of settings, there has been a relative absence of work that analyses the impact of the regulatory environment on such activities. We find that the regulatory environment does impact the real and accrual earnings management activities of IPO firms. Our results show that IPO firms listing on the lightly regulated UK Alternative Investment Market (AIM) have higher (lower) levels of accrual based and sales based (discretionary expenses based) earnings management around the IPO than firms listing on the more heavily regulated Main market in the UK.
Book Synopsis Venture Capital and Public Offering Negotiation by :
Download or read book Venture Capital and Public Offering Negotiation written by and published by . This book was released on 1983 with total page 584 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Venture Capital Cycle by : Paul Alan Gompers
Download or read book The Venture Capital Cycle written by Paul Alan Gompers and published by MIT Press. This book was released on 2004 with total page 592 pages. Available in PDF, EPUB and Kindle. Book excerpt: An analysis of the venture capital process, from fund-raising through investing to exiting investments; a new edition with major revisions and six new chapters that reflect the latest research.
Book Synopsis Initial Public Offerings by : Research Foundation of CFA Institute
Download or read book Initial Public Offerings written by Research Foundation of CFA Institute and published by . This book was released on 1990-01-01 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Institutional Affiliation and the Role of Venture Capital by : Yasushi Hamao
Download or read book Institutional Affiliation and the Role of Venture Capital written by Yasushi Hamao and published by . This book was released on 1998 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The presence of venture capital in the ownership structure of U.S. firms going public has been associated with both improved long-term performance and lower underpricing at the time of the IPOs. In Japan, we find the long-run performance of venture capital-backed IPOs to be no better than that of other IPOs, with the exception of firms backed by foreign owned or independent venture capitalists. Many of the major venture capital firms in Japan are subsidiaries of securities firms that may face a conflict of interest when underwriting the venture capital-backed issue. When venture capital holdings are broken down by their institutional affiliation, we find that firms with venture backing from securities company subsidiaries do not perform significantly worse over a three-year time horizon than other IPOs. On the other hand, we find that IPOs in which the lead venture capitalist is also the lead underwriter have higher initial returns than other venture capital-backed IPOs. The latter result suggests that conflicts of interest influence the initial pricing, but not the long-term performance, of initial public offerings in Japan"--Abstract
Book Synopsis Earnings Growth and Underpricing with Venture Capitalist Backed Initial Public Offerings by : Elke J.E. Klaassen
Download or read book Earnings Growth and Underpricing with Venture Capitalist Backed Initial Public Offerings written by Elke J.E. Klaassen and published by . This book was released on 2007 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: The literature on the certification role of venture capitalists in initial public offerings (IPOs) is mixed and quite often no significant effect is found. Similarly, we find no significant effect of venture capitalists on IPO-underpricing in The Netherlands, if we study the impact of venture capitalists on all IPOs. However, underpricing is affected positively in venture capital backed companies that exhibit large net earnings growth and negatively in venture capital backed companies that exhibit small net earnings growth. The large underpricing of large net earnings growth companies suggests that informed insiders are not impressed by past net earnings of venture capital backed IPOs, but that past net earnings growth attracts less informed investors to bid fiercely for the shares after the IPO.
Book Synopsis Venture Capital and Initial Public Offering by : Weicheng Wang
Download or read book Venture Capital and Initial Public Offering written by Weicheng Wang and published by . This book was released on 2010 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt:
