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Insider Holding Requirements And Earnings Management
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Book Synopsis Insider Holding Requirements and Earnings Management by : Steven Balsam
Download or read book Insider Holding Requirements and Earnings Management written by Steven Balsam and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines how generally accepted accounting principles influence firm responses to Securities and Exchange Commission rule changes. It shows that a change in insider holding requirements for employee stock options led to a decrease in the use of stock appreciation rights, a response caused by the disadvantageous accounting treatment of stock appreciation rights relative to employee stock options. Further, firms that decrease their use of stock appreciation rights compensate employees by increasing their use of employee stock options. Cross-sectionally we find the likelihood a firm decreases its use of stock appreciation rights is positively associated with the magnitude of expense associated with stock appreciation rights, the firm's use of income-increasing accounting methods, and firm performance. While these results are consistent with earnings management, the finding that these firms are better performing and less leveraged lead us to believe that the choice is driven by efficiency considerations rather than managerial opportunism.
Book Synopsis Insider Trading and Earnings Management by : Thomas Alan Issaevitch
Download or read book Insider Trading and Earnings Management written by Thomas Alan Issaevitch and published by . This book was released on 2008 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Insider Ownership, Earnings Management and Earnings Thresholds by : 楊美玲
Download or read book Insider Ownership, Earnings Management and Earnings Thresholds written by 楊美玲 and published by . This book was released on 2009 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Effect of Shareholder Rights and Insider Ownership on Earnings Management by : Henry He Huang
Download or read book The Effect of Shareholder Rights and Insider Ownership on Earnings Management written by Henry He Huang and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether shareholder rights, which enable shareholders to replace managers, can constrain earnings management and whether this effect is conditional on the level of insider ownership. Using the comprehensive shareholder rights measure constructed by Gompers, Ishii, and Metrick (2003), we find that firms with stronger shareholder rights are associated with less income-increasing discretionary accruals, suggesting that stronger shareholder rights deter managers from reporting aggressive earnings. More importantly, we investigate whether this association is conditional on the level of insider ownership. If insider ownership introduces managerial entrenchment, managers with higher ownership would be insulated from shareholder discipline. Consistent with this entrenchment theory, we find that the association between shareholder rights and earnings management becomes insignificant in the presence of higher levels of insider ownership. Shareholder rights are negatively associated with earnings management only when insider ownership is low. Our results indicate that the disciplinary effect of shareholder rights can be attenuated by high levels of insider ownership.
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 Insider Trading and Incentives to Manage Earnings by : Messod D. Beneish
Download or read book Insider Trading and Incentives to Manage Earnings written by Messod D. Beneish and published by . This book was released on 2014 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper evaluates two hypotheses about the relation between insider selling and earnings management in periods preceding poor corporate performance. Consistent with our litigation avoidance hypothesis, we provide evidence that managers manage earnings upwards after they have engaged in abnormally high levels of insider selling. In contrast, we find no support for the pump and dump hypothesis of earnings being managed before managers sell their equity. Our findings indicate insider trading provides managers with incentives to subsequently manage earnings upward, to distance their selling from the revelation of bad news and reduce the likelihood of reputation, employment, and litigation losses. We show these incentives co-exist and complement incentives to avoid default in a sample of 462 firms that experience technical default in 1983-1997. Our findings suggest that investors and those with oversight authority (e.g., boards of directors, auditors, and regulators) consider monitoring prior rather than contemporaneous insider-trading activity as a part of their corporate governance practices.
Book Synopsis Insider Ownership and Earnings Management by : Aminuddin Sharifudin
Download or read book Insider Ownership and Earnings Management written by Aminuddin Sharifudin and published by . This book was released on 2009 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Relationship Between Earnings Management and Insider Trading by : Joseph Wong
Download or read book Relationship Between Earnings Management and Insider Trading written by Joseph Wong and published by . This book was released on 1998 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Analyst Forecasts, Earnings Management, and Insider Trading Patterns by : Garen Markarian
Download or read book Analyst Forecasts, Earnings Management, and Insider Trading Patterns written by Garen Markarian and published by VDM Publishing. This book was released on 2008 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt: For at least two decades, it was believed that making managers into owners could ameliorate many agency conflicts existing in capital markets settings. In fact, it now appears that managerial ownership of stock itself may encourage earnings manipulations. In this study, we show that CEO insider trading, earnings manipulations, and the ability to meet and exceed market benchmarks are all interrelated. Managers manipulate earnings to exceed analyst earnings forecasts. Additionally, managerial insider selling increases with performance relative to analyst forecasts, and is magnified by stock option holdings. Insider selling is more intense among managers who have used earnings manipulations to exceed forecasts. Additionally, managers who sell following the announcement of an earnings surprise are able to earn abnormal profits. Firms having both positive earnings surprises and insider selling exhibit lower subsequent accounting performance. This study is of interest to academics, practitioners who are interested in the finer mechanisms of markets, and advanced finance students, alike.
Book Synopsis Earnings Valuation and Insider Trading by : Wen Yu
Download or read book Earnings Valuation and Insider Trading written by Wen Yu and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores insider trading as a function of differences between managers' and the market's assessment of company earning components - specifically operating cash flows and accruals. It extends prior research by more comprehensively studying earnings components. It also builds a perspective of managers as sophisticated investors who, while engaging in earnings management, ultimately make insider trading decisions based on the divergence between their private valuation of earnings components and the market's. Thus managers may, seemingly counter-intuitively, engage in income-increasing earnings management and insider buying in the same period. Using 4,357 recent firm - years of observations, we find strong evidence that insider buying, but not selling, behavior is consistent with managerial insider trading based on a market valuation divergence of both operating cash flows and accruals, rather than on either element individually, or on managers' use of accounting discretion. We apply the methodological framework of the Mishkin (1983) test to address the hypothesis above. In particular, we assess the relations involving market pricing and characteristics of company earnings and insider trading as these relate to the fundamental idea of market valuation divergence.
Book Synopsis Insider Trading and Earnings Management by : Julia Sawicki
Download or read book Insider Trading and Earnings Management written by Julia Sawicki and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the relationship between earnings management and insider trading, specifically investigating whether discretionary accruals are related to insider trading and valuation. We find strong evidence of insiders managing earnings downward when buying and managing earnings upward when selling. On the marginal basis, value (high book-to-market value) firms manage their earnings upward compared to growth (low book-to-market value) firms, consistent with a signaling hypothesis. However the opposite is true on the average basis, consistent with an opportunistic hypothesis.
Book Synopsis Insiders' Rule 10b5-1 Plan Sales and Earnings Management by : Stanley Veliotis
Download or read book Insiders' Rule 10b5-1 Plan Sales and Earnings Management written by Stanley Veliotis and published by . This book was released on 2007 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Effects of Legal Environment and Managerial Ownership on Insider Trading Around Management Earnings Forecast Disclosures by : Youngsoon Susan Cheon
Download or read book Effects of Legal Environment and Managerial Ownership on Insider Trading Around Management Earnings Forecast Disclosures written by Youngsoon Susan Cheon and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates whether insiders who possess superior information to outsiders behave as if they time their trading around management forecast disclosures in order to earn extra profits. In the 1980s, Congress passed the Insider Trading Sanctions Act (ITSA) of 1984 and the Insider Trading and Securities Fraud Enforcement Act (ITSFA) of 1988 to prohibit illegal insider trading. Hence, this study further examines whether passage of the 1984 and 1988 Acts affect timing and pattern of insider trading around management forecast disclosures. Finally, the study investigates whether managerial ownership affects insider trading behavior around management forecast disclosures. This study finds evidence consistent with opportunistic i nsider trading. The 1984 ITSA appears to affect sell-side insider trading by reducing pre-disclosure purchase/sale transactions and self-serving sale trading volume. In contrast, pre-disclosure purchase trading increased after the 1988 Act. There is evidence that insider ownership affects the timing of insider trading. Insiders with low ownership are likely to buy after management forecast disclosures, while insiders with high ownership tend to buy before the forecast disclosures. Results, however, suggest that insiders with higher stakes do not necessarily trade more opportunistically than those with low ownership.
Book Synopsis Are Insider Trades and Earnings Management Related? by : Julia Sawicki
Download or read book Are Insider Trades and Earnings Management Related? written by Julia Sawicki and published by . This book was released on 2005 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper looks at the relationship between insider trading and earnings management, specifically investigating it in the context of firm performance and characteristics. We find that performance improvements in years following purchases are linked to earnings management. There is also evidence that contrarian patterns of insider trading coincide with downward (upward) earnings management for the glamour (value) firms, thus providing a signal to investors about mispricing.
Book Synopsis The Impact of Insider Ownership Stake Changes at the IPO and Earnings Management on Post-IPO Operating Performance by : Alex Leum Han
Download or read book The Impact of Insider Ownership Stake Changes at the IPO and Earnings Management on Post-IPO Operating Performance written by Alex Leum Han and published by . This book was released on 2010 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Past academic research reports that post-IPO operating performance can be signaled through or explained by company characteristics in a period immediately preceding or following the IPO. This paper examines whether post-IPO operating performance is correlated with earnings management activities immediately preceding and following the IPO, insider ownership retention rates after the IPO, and percentage of insider ownership changes at the IPO. I also test whether aggressive earnings managers experience worse operating performance measured by operating income over total assets than conservative earnings managers. The results from various regression analyses and t-tests in this paper show that earnings management activities immediately preceding and following the IPO and insider ownership retention rates are not correlated with post-IPO operating performance. However, this paper reports a statistically negative relationship between percentage of insider ownership changes at the IPO and post-IPO operating performance in the issue year.
Book Synopsis Why Do Insiders Hold the Shares Acquired from the Exercise of Executive Stock Options by : Thomas Joseph Smith
Download or read book Why Do Insiders Hold the Shares Acquired from the Exercise of Executive Stock Options written by Thomas Joseph Smith and published by . This book was released on 2010 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: This study extends the employee stock option literature by examining the holding period between exercise and eventual disposition of shares for evidence of earnings management and private information. Prior research has found that hold decisions are associated with future price appreciation, and inferred that private information is behind the decision. This study examines the holding period to determine if the observed future returns are influenced by managers manipulating earnings over the holding period or based on actual private information. It uses multiple proxies for earnings management and finds that individual hold behavior is associated with concurrent and future discretionary accruals. It also finds that a firm-wide hold measure can be used to incrementally explain current and future discretionary accruals. It then examines the relationship between a cleaner proxy for private information (future acquisition announcements), and finds that future acquisitions are associated with current holding decisions.
Book Synopsis Transient Institutional Investors' Response to Insider Trade following Earnings Announcements by : Juan Wang
Download or read book Transient Institutional Investors' Response to Insider Trade following Earnings Announcements written by Juan Wang and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines how institutions respond to insider trade in addition to accounting information. I show that transient institutions defined as those with short investment horizon and high turnover, reduce holdings in the following quarters when insiders are net sellers following earnings announcements. Moreover, I show that transient institutions significantly reduce more holdings when insiders are net sellers and firms also meet or beat analyst forecasts. In addition, I show that the greater reduction in transient institutional holdings when insiders are net sellers and firms also meet or beat analyst forecasts do not appear to be affected by earnings management and expectation guidance. Finally, I show that insider trade profits in terms of future abnormal returns are lower when transient institutional holdings are higher. Overall, these findings provide evidence on the ability of institutions to process insider trade information in addition to accounting numbers.
