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Role Of Underwriters In Restraining Earnings Management In Initial Public Offerings
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Book Synopsis Role of Underwriters in Restraining Earnings Management in Initial Public Offerings by : Hei Wai Lee
Download or read book Role of Underwriters in Restraining Earnings Management in Initial Public Offerings written by Hei Wai Lee and published by . This book was released on 2017 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the relationship between underwriter reputation and earnings management of IPO firms over the period of 1991-2005. We find that IPO firms engage in less earnings management if they are underwritten by prestigious investment bankers. Furthermore, the role of prestigious underwriters in restraining earnings management of IPO issuers do not change during the Internet Bubble period or after the passage of the Sarbanes-Oxley Act (SOX). The findings support the certification role of underwriters in the IPO process.We also document that firms going public in the post-SOX period engage in less earnings management compared to firms going public in the pre-SOX period. Further findings suggest that the changing objectives of venture capitalists may explain the reduction in the level of earnings management of IPO firms following the passage of SOX.
Book Synopsis Earnings Management, Behavioral Investor and Lockups by : Alfred Shang
Download or read book Earnings Management, Behavioral Investor and Lockups written by Alfred Shang and published by . This book was released on 2004 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Role of the Underwriter in the Initial Public Offering Process by : Georgi Georgiev
Download or read book The Role of the Underwriter in the Initial Public Offering Process written by Georgi Georgiev and published by GRIN Verlag. This book was released on 2012-06 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,7, Martin Luther University, 38 entries in the bibliography, language: English, abstract: The world of finance is complex. There are many aspects, which cannot be fully explained and still confuse the researchers. One of the most discussed topics is that of Initial Public Offerings (IPO) mainly because of the intricate connections between investment bankers (underwriters), issuers and buyers. This paper will try to summarize the whole process of going public and emphasize on the role of the (lead) underwriter in it. The paper discusses mainly the American "way" of going public, but the procedure is generally the same for the European market with some differences that are explained in the text. The advantages, disadvantages and the legal requirements for going public are enlightened, in order of understanding the important role, which the underwriter plays in the whole process. The structure and the legal consequences of the due diligence process are presented. The types of agreement between the underwriter and the issuer are described, with the consequences that originate from them. The ways of determining the price and the advantages and disadvantages of any of them are presented, with respect to the importance of the underwriter's role in them and the liabilities that she has. The problem with the underpricing is discussed more detailed, since this is one of the big challenges in the IPO process. Some theories that explain this phenomenon are briefly discussed, showing the mechanism that is behind the underpricing problem. Some of the unlawful allocation practices are listed, with examples that show that even the top underwriters use prohibited actions to ensure the successful completion of the IPO process. The importance of the pre-opening period for the determination of the right market price and the active participation of the underw
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 1994 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:
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 Underwriter-Auditor Relationship and Pre-IPO Earnings Management by : Du Xingqiang
Download or read book Underwriter-Auditor Relationship and Pre-IPO Earnings Management written by Du Xingqiang and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the influence of underwriter-auditor relationship (UAR) on pre-initial public offering (IPO) earnings management. Using a sample of Chinese to-be-listed firms, we find that a close UAR, as reflected in repeated collaborations between an underwriter and an audit firm in IPOs, is positively associated with pre-IPO earnings management. This association is more pronounced for firms with politically connected auditors/underwriters, firms with less reputable auditors/underwriters, firms located in provinces with weak legal environment, firms to-be-listed on boards with lax listing requirements, and firms whose auditors are with low industry specialization, and legal liability exposures. We provide further evidence that UAR is associated with greater likelihood of irregular activities in post-IPO period and poorer post-IPO financial performance. To the extent that we control for alternative explanations and potential endogeneity, our results suggest that the collusion incentive is likely to drive repeated collaborations between underwriters and auditors in the Chinese IPO market. Our findings provide interesting implications for auditors, investors, and regulators seeking to understand the Chinese IPO market.
Book Synopsis Underwriter Choice and Earnings Management by : Hoje Jo
Download or read book Underwriter Choice and Earnings Management written by Hoje Jo and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of seasoned equity offerings (SEOs), this paper examines the association between the choice of financial intermediary and earnings management. We contend that with more stringent standards for certification and intense monitoring, highly prestigious underwriters restrict firms' incentives for earnings management to protect their reputation and to avoid potential litigation risks, while firms with greater incentives for earnings management avoid strict monitoring by choosing low-quality underwriters. Consistent with our predictions, we find an inverse association between underwriter quality and issuers' earnings management. In addition, we find that underwriter quality is positively related to SEOs' post-issue performance, even after controlling for the effect of earnings management. We also find that firms with low underwriter prestige and high levels of earnings management under-perform the most. However, the effect of underwriter choice on post-issue performance does not last long.
Book Synopsis Earnings Management and Delisting Risk of Initial Public Offerings by : Jinliang Li
Download or read book Earnings Management and Delisting Risk of Initial Public Offerings written by Jinliang Li and published by . This book was released on 2010 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Earnings management is a corporate decision subject to costs. Both earnings management in the IPO process and the ex ante delisting risk of newly issued firms are related to firm fundamentals. With a sample of IPOs from 1980 to 1999, we find that the degree of earnings management possesses significant predictive power on IPO failure. IPO firms associated with aggressive earnings management are more likely to delist for performance failure, and tend to delist sooner. Furthermore, we find that IPO firms associated with conservative earnings management are more likely to be merged or acquired and they earn positive abnormal returns. Our results also show that IPO issuers manage earnings in response to market demand. Market-wide earnings management of IPO firms interacts with the IPO cycle documented by Lowry and Schwert (2002).
Book Synopsis Earnings Management and Ownership Retention for Initial Public Offering Firms by : Qintao Fan
Download or read book Earnings Management and Ownership Retention for Initial Public Offering Firms written by Qintao Fan and published by . This book was released on 2009 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates, both theoretically and empirically, how earnings management and ownership retention interact, and how these two jointly affect the equilibrium market valuation of IPO firms in the presence of information asymmetry. Analytically, this paper extends the univariate signaling framework of Leland and Pyle (1977) and derives an efficient signaling equilibrium in which both reported earnings and ownership retention are endogenously chosen to convey the IPO issuer's private information. It is shown that even though either ownership retention or reported earnings communicates the issuer's type to the market unambiguously, the issuer will strategically employ both signals to achieve separation from potential lower quality imitators at minimal cost. Comparative statics analysis shows that the trade-off between the two signals depends critically on the uncertainty over future earnings. The theoretical analysis generates several empirical implications regarding market efficiency, IPO pricing, and the strategic choice of earnings management. Through systematic econometric analysis, I confirm the major predictions of the model.
Book Synopsis Earnings Management, Underwriter Reputation, and Marketization by : Chao Chen
Download or read book Earnings Management, Underwriter Reputation, and Marketization written by Chao Chen and published by . This book was released on 2014 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: With a sample of 504 IPO issuers over a period of 2002-2008 in China, this paper studies a previously ignored issue by examining the relationship between pre-IPO earnings management and underwriter reputation for issuers with different level of marketization. We document that underwriter reputation is negatively related to pre-IPO earnings management only if the issuer is highly marketized. Specifically, we find a significantly negative relationship between pre-IPO earnings management and underwriter reputation if the issuer is a non-state-owned enterprise (NSOE) issuer, a small-size issuer, or is listed on the Small and Medium Enterprise (SME) Board. No significant association is found for the state-owned enterprise (SOE) issuers, the large issuers, or Main Board issuers. We argue that the results are driven by the fact that issuers in the NSOE, small-sized, or SME market segment have more incentives to signal their earnings quality to avoid adverse selection by the investors, and/or reputable underwriters are more influential over their clients in mitigating earnings management.
Book Synopsis "Cooking the Books" Around Initial Public Offerings by : Jasper Seger
Download or read book "Cooking the Books" Around Initial Public Offerings written by Jasper Seger and published by . This book was released on 2008 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Management and Initial Public Offerings by : Brian John Adams
Download or read book Earnings Management and Initial Public Offerings written by Brian John Adams and published by . This book was released on 2014 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a typical IPO, insiders are “net sellers” of IPO shares; however, in a demutualizing thrift, insiders are “net buyers” of IPO shares. Using a sample of mutual depository IPOs, we find evidence consistent with earnings management prior to the conversion of mutual thrifts. We find on average that mutuals report lower ROA and increased loan loss provisions and loan loss reserves in the period prior to the demutualization. Using a two-stage approach, we also find that the level of discretionary loan loss provisions and discretionary reserves are positively related to both the level of insider participation in the IPO and the first-day returns to investors. Our results are consistent with management of mutual thrifts benefiting at the conversion from reduced pre-IPO earnings and book equity resulting from earnings management.
Book Synopsis Studying Earnings Management in Initial Public Offerings (IPOS) and Its Impact on IPO Pricing in India by : Alok Pande
Download or read book Studying Earnings Management in Initial Public Offerings (IPOS) and Its Impact on IPO Pricing in India written by Alok Pande and published by . This book was released on 2009 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Effect of Prestigious Underwriters and Their Affiliated Venture Capitalist Businesses on Earnings Management and Underpricing of IPO Issuers by :
Download or read book The Effect of Prestigious Underwriters and Their Affiliated Venture Capitalist Businesses on Earnings Management and Underpricing of IPO Issuers written by and published by . This book was released on 2014 with total page 140 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 Do More Reputable Financial Institutions Reduce Earnings Management by IPO Issuers? by : Gemma Lee
Download or read book Do More Reputable Financial Institutions Reduce Earnings Management by IPO Issuers? written by Gemma Lee and published by . This book was released on 2011 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates whether financial intermediaries (FIs) participating in the IPO process play a significant role in restraining earnings management (EM). Specifically, we examine whether EM around IPOs is negatively related to investment banks (IBs) and venture capital (VC) investor reputations. In general, we do not find evidence that VCs as a group significantly restrain EM by IPO issuers. However, we uncover strong evidence that more reputable VCs and IBs are associated with significantly less EM, which is consistent with them implicitly certifying the quality of issuer financial reports. Moreover, a stronger reduction in EM is found when more reputable IBs are matched with more reputable VCs, which indicates that VC and IB reputation are complements rather than substitutes. These conclusions are invariant to adjustments for potential endogeneity of underwriter reputation and VC-backing or reputation.
Book Synopsis Assessing Earnings Quality at the IPO by : Melissa F. Lewis
Download or read book Assessing Earnings Quality at the IPO written by Melissa F. Lewis and published by . This book was released on 2007 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investors in initial public offering (IPO) firms face a dilemma: Should they rely on earnings containing income-increasing accruals when valuing IPOs? On one hand, these accruals could reflect information about managers' expectations of future cash flows. On the other hand, managers could use the discretion inherent in current accounting standards to opportunistically inflate earnings in hopes of increasing the offer price. This paper explores the extent to which reputable investment banks help resolve uncertainty about the quality of IPO firms' income-increasing accruals and resulting earnings. Investment bankers have the experience, knowledge, and incentives to accurately assess the quality of IPO firms' earnings and correctly price earnings components. Accordingly, I predict and find that income-increasing accruals are of higher quality for firms whose managers employ a reputable investment bank than for firms whose managers employ a less reputable investment bank. Further, IPO market participants capitalize earnings and positive accruals at higher multiples when firms employ reputable investment banks. The higher multiples applied to the earnings and income-increasing accruals of firms with reputable investment banks do not appear to be "over-priced" as Fama and French factor regressions show no evidence of long-run underperformance for the sample as a whole, or subsets of the sample with reputable investment bank representation. Overall, my findings are consistent with a sophisticated market for IPO securities, and suggest that market participants, on average, recognize and price differential earnings quality at the IPO.
