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Earnings Management Around Seasoned Equity Offerings
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Book Synopsis Earnings Management Around Seasoned Equity Offerings by : Lakshmanan Shivakumar
Download or read book Earnings Management Around Seasoned Equity Offerings written by Lakshmanan Shivakumar and published by . This book was released on 2002 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines earnings management around seasoned equity offerings. Consistent with managers managing earnings, I find offering firms to have temporarily high earnings around the offering. The temporary increase in earnings around the offering appears to be primarily driven by abnormally high accruals in the period. By relating my estimates of abnormal accruals to the incentives and abilities of managers to manage earnings, I show that these abnormal accruals result from earnings management. Further, this analysis shows that the ability to manage earnings is constraining mainly for managers with high incentives to manage earnings. Also, I argue that the announcement of an equity offering signals earnings management in prior quarters to the market, which would result in a negative price reaction to the announcement. Consistent with this argument, I show that the earnings management before an offering announcement partly explains the negative market reaction to the announcement.
Book Synopsis Earnings Management Activities Around Seasoned Equity Offerings by : 林暐樺
Download or read book Earnings Management Activities Around Seasoned Equity Offerings written by 林暐樺 and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Causes or Consequences? Earnings Management Around Seasoned Equity Offerings by : Jie Chen
Download or read book Causes or Consequences? Earnings Management Around Seasoned Equity Offerings written by Jie Chen and published by . This book was released on 2010 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior studies find that earnings management around seasoned equity offerings is negatively related to subsequent stock performance and attribute the finding to the issuing firms' use of inflated earnings to boost stock prices. We show in this paper that earnings management is not significantly related to concurrent abnormal returns. Rather, it is significantly positively related to prior abnormal returns. This suggests that, rather than a cause of stock price run-up, earnings management is likely a consequence of the stock overvaluation prior to the offerings, supporting the agency theory of overvalued equity (Jensen, 2005). We also show that when examining the relation between earnings management and subsequent stock performance, one has to be careful with the appropriate window for measuring earnings management.
Book Synopsis Earnings Management and Insider Trading Around Seasoned Equity Offerings by : Loretta Nartekie Baryeh
Download or read book Earnings Management and Insider Trading Around Seasoned Equity Offerings written by Loretta Nartekie Baryeh and published by ProQuest. This book was released on 2000 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Accounting Quality and Media Attention Around Seasoned Equity Offerings by : Fernando Comiran
Download or read book Accounting Quality and Media Attention Around Seasoned Equity Offerings written by Fernando Comiran and published by . This book was released on 2018 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates how media coverage affects quality of accounting information for seasoned equity offering (SEO) firms. Media attention can either serve as a “watchdog” (watchdog hypothesis) and effectively reduce earnings management; or, alternatively, can create an extra pressure on managers putting them under spot so that managers try to fulfill market expectations and manage earnings (attention pressure hypothesis). We consider two types of earnings management: accrual earnings management, and real earnings management. Using a sample of SEOs from 1993 to 2014, we find that media serves as a watchdog for real earnings management, but does not affect accrual manipulations. Our findings hold after we control for endogenous factors affecting firms' earnings management choices, and when we use alternative time periods for media coverage. This paper is the first to demonstrate that media attention affects the quality of accounting information during equity offerings as it successfully reduces real earnings management.
Book Synopsis Earnings Management and The Post-Issue Underperformance of Seasoned Equity Offerings by : Siew Hong Teoh, Ivo Welch, T.J. Wong
Download or read book Earnings Management and The Post-Issue Underperformance of Seasoned Equity Offerings written by Siew Hong Teoh, Ivo Welch, T.J. Wong and published by . This book was released on 1995 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Around Seasoned Equity Offerings by : Srinivasan Rangan
Download or read book Earnings Around Seasoned Equity Offerings written by Srinivasan Rangan and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper documents significant earnings management around seasoned equity offerings. I find that discretionary accruals are positive and significant in the quarter preceding, the quarter of, and the quarter following the announcement of the offering. Additional tests that control for the endogeneity of the decision to issue equity confirm that earnings are managed in direct response to the decision to issue equity in the quarter preceding the announcement of the offering. Consistent with recent research, I find that offering firms experience poor stock price and earnings performance in the three year period subsequent to the offering. I then show that (i) the subsequent earnings declines can be predicted using the magnitude of accruals management at the time of the offering and (ii) a portion of the post-offering stock price declines are related to the predictable earnings declines. My results therefore suggest that at least a portion of the anomalous post-offering stock performance reflects the stock market's inability to unravel accruals management around the time of the offering. Data Availability: The list of firms that made seasoned offerings and the offering announcement dates are available from the author. The rest of the data used in this study are publicly available from sources identified in the paper.
Book Synopsis Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings by : Daniel A. Cohen
Download or read book Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings written by Daniel A. Cohen and published by . This book was released on 2008 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine earnings management behavior around SEOs, focusing on both real activities and accrual-based manipulation. Although research has addressed the issues of earnings management around SEOs and earnings management via real activities manipulation, ours is the first paper to put these two issues together. We make three contributions to the literature. First, we document that firms use real, as well as accrual-based, earnings management tools around SEOs. Second, we show how the tendency for firms to tradeoff real versus accrual-based earnings management activities around SEO s varies cross-sectionally. We find that firms choices vary predictably as a function of the firm s ability to use accrual management and the costs of doing so. Our model is a first step in examining how firms tradeoff between real versus accrual methods of earnings management. Third, we compare the economic costs of accrual versus real earnings management around SEO s, by examining the effect of each type of earnings management on the firm s future performance. We provide the first evidence on this important issue by showing that the costs of real earnings management are likely greater than the costs of accrual earnings management, at least in the SEO context.
Book Synopsis Valuation, Earnings Management and the Underperformance of Loss Seasoned Equity Offerings by : Fernando Comiran
Download or read book Valuation, Earnings Management and the Underperformance of Loss Seasoned Equity Offerings written by Fernando Comiran and published by . This book was released on 2018 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current literature on earnings management around seasoned equity offerings (SEOs) mainly concentrates on discretionary accruals, and considers all SEOs as a homogenous pool of firms. The uniqueness of this paper is in linking firms' valuation to their discretionary choices and by demonstrating that loss firms do not manage earnings during SEOs as earnings are not informative for their valuation. We find that loss firms overinvest in R&D around SEOs, because R&D expenditures are the main value-driver for loss SEOs. We further show that overinvestment in R&D is negatively associated with future operating performance for loss firms.
Book Synopsis Earnings Management, Corporate Governance and the Market Performance of Seasoned Equity Offerings by : Michael Firth
Download or read book Earnings Management, Corporate Governance and the Market Performance of Seasoned Equity Offerings written by Michael Firth and published by . This book was released on 2002 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether pre-issue discretionary current accruals predict post-issue earnings performance and returns. We find evidence suggesting that offering firms borrow future income to manage earnings in pre-issue years and consequently earnings decrease in post-issue year 2. The information content of pre-issue discretionary current accruals is reflected in one-year buy and hold abnormal returns for the rights offering firms. Our paper also examines whether the incidence of earnings management around SEOs depends on corporate governance structures. Our results show that SEO firms that have larger board size have a higher degree of earnings management around SEOs. This result is consistent with Jensen's (1993) view that smaller boards provide more of a controlling function than do larger boards.
Book Synopsis Earnings Management and the Post-issue Underperformance of Seasoned Equity Offerings by : Siew Hong Teoh
Download or read book Earnings Management and the Post-issue Underperformance of Seasoned Equity Offerings written by Siew Hong Teoh and published by . This book was released on 1995 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Management and the Post-Issue Underperformance of Seasoned Equity Offerings by : Siew Hong Teoh
Download or read book Earnings Management and the Post-Issue Underperformance of Seasoned Equity Offerings written by Siew Hong Teoh and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Loughran and Ritter (1995) document that firms issuing seasoned equity offerings (SEOs) severely underperform the stock market for three to five years after the offering. Our paper examines the hypothesis that SEO investors are too optimistic because they naively extrapolate earnings trends without fully adjusting for observable discretionary managerial reporting choices. We find that aggressive firms, which report high pre-SEO earnings at the expense of post-SEO earnings by taking high discretionary pre-issue accruals, subsequently performed worse (abnormal stock returns and industry-adjusted net income). Aggressive quartile firms earned a highly significant-48% four-year cumulative abnormal return; conservative quartile firms earned an insignificant-7% four-year cumulative abnormal return. In contrast with discretionary accruals, pre-issue non-discretionary accruals did not predict post SEO returns. This paper is also available at the following web address: ftp://next.agsm.ucla.edu/academic.finance/mngseo.ps ftp://next.agsm.ucla.edu/academic.finance/mngseo.hp If you have any questions concerning downloading, please contact Professor Teoh.
Book Synopsis Earnings Management and the Operation Performance of Seasoned Equity Offerings by :
Download or read book Earnings Management and the Operation Performance of Seasoned Equity Offerings written by and published by . This book was released on 2008 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Management and the Underperformance of Seasoned Equity Offerings by : Siew Hong Teoh
Download or read book Earnings Management and the Underperformance of Seasoned Equity Offerings written by Siew Hong Teoh and published by . This book was released on 1997 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Effect of the Need for Subsequent Seasoned Equity Offerings on Earnings Management Motivation by : Moshe Hagigi
Download or read book The Effect of the Need for Subsequent Seasoned Equity Offerings on Earnings Management Motivation written by Moshe Hagigi and published by . This book was released on 2018 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Several previous studies have discussed the differential market reaction to Seasoned Equity Offerings (SEOs) which were issued at different frequencies and in different sequences. We explore an additional aspect to this issue. We have attempted to study the impact of the need for subsequent SEOs on the managerial motivation to manage earnings. We hypothesize that those firms with less of a need for subsequent equity issuances are more likely to engage in “income-increasing” earnings management (EM) prior to their equity issuances. Conversely, equity issuers with more of a need for subsequent equity issuances would be more concerned about the potential impact of current EM on their future reported earnings and therefore would be less likely to manage earnings. Using data from U.S. companies during the period 1984-2014, we find that the level of income-increasing abnormal accruals around equity issuance is negatively related to their need for subsequent equity issuance. These results are consistent with the assumption that firms which have financing need plan not only for the current equity issuance but also for issuances in the near future.
Book Synopsis Earnings Management and the Post-Issue Underperformance in Seasoned Equity Offerings by : Siew Hong Teoh
Download or read book Earnings Management and the Post-Issue Underperformance in Seasoned Equity Offerings written by Siew Hong Teoh and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Loughran and Ritter (1995) document that firms issuing seasoned equity offerings (SEOs) severely underperform the stock market for three to five years after the offering. Our paper examines the hypothesis that SEO investors are too optimistic because they naively extrapolate earnings trends without fully adjusting for observable discretionary managerial reporting choices. We find that aggressive firms, which report high pre-SEO earnings at the expense of post-SEO earnings by taking high discretionary pre-issue accruals, subsequently perform worse (abnormal stock returns and industry-adjusted net income). Aggressive quartile firms earned a highly significant-50% four-year cumulative abnormal return; conservative quartile firms earn an insignificant-7% four-year cumulative abnormal return. In contrast with discretionary accruals, pre-issue non-discretionary accruals did not predict post-SEO returns.
Book Synopsis Earnings Management and the Performance of UK Seasoned Equity Offerings by : Abdullah Muhammad Iqbal
Download or read book Earnings Management and the Performance of UK Seasoned Equity Offerings written by Abdullah Muhammad Iqbal and published by . This book was released on 2002 with total page 361 pages. Available in PDF, EPUB and Kindle. Book excerpt:
