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The Impact Of Credit Ratings And Ceos Work Experience On Earnings Management And Post Issue Performance Of Us Ipos
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Book Synopsis The Impact of Credit Ratings and CEOs' Work Experience on Earnings Management and Post-issue Performance of U.S. IPOs by : Hang Minh Pham
Download or read book The Impact of Credit Ratings and CEOs' Work Experience on Earnings Management and Post-issue Performance of U.S. IPOs written by Hang Minh Pham and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Credit Rating Impact on Earnings Management Around Initial Public Offerings by : Dimitrios Gounopoulos
Download or read book Credit Rating Impact on Earnings Management Around Initial Public Offerings written by Dimitrios Gounopoulos and published by . This book was released on 2016 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the impact of having a credit rating on earnings management (EM) through accruals and real activities manipulation by initial public offering (IPO) firms. We find that firms going public with a credit rating are less likely to engage in income-enhancing accrual-based and real EM in the offering year. The monitoring by a credit rating agency (CRA) and the reduced information asymmetry due to the provision of a credit rating disincentivise rated issuers from managing earnings. We also suggest that the participation of a reputable auditing firm is crucial for CRAs to effectively restrain EM. Moreover, we document that for unrated issuers, at-issue income-increasing EM is not linked to future earnings and negatively related to post-issue long-run stock performance. However, for rated issuers, at-issue income-increasing EM is positively associated with subsequent accounting performance and unrelated to long-run stock performance following the offering. The evidence indicates that managers in unrated firms generally manipulate earnings to mislead investors, while managers in rated firms tend to exercise their accounting and operating discretion for informative purposes.
Book Synopsis Financial Expert CEOs and Earnings Management Around Initial Public Offerings (IPOs). by : Dimitrios Gounopoulos
Download or read book Financial Expert CEOs and Earnings Management Around Initial Public Offerings (IPOs). written by Dimitrios Gounopoulos and published by . This book was released on 2018 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study whether the financial experience of chief executive officers (CEOs) is associated with earnings management around initial public offerings (IPOs). Examining the sample of U.S. initial public offerings (IPOs) from 2003 to 2011, we find that newly listed firms with financial expert CEOs are less likely to engage in earnings management than those with non-financial expert CEOs. We also document that for IPO firms managed by financial expert CEOs the at-issue earnings management is positively associated with future accounting performance and not significantly related to post-issue long-term stock abnormal returns. This indicates that financial expert CEOs tend to be informative in financial reporting in order to allow investors to properly gauge the fair value of the firm. Overall, our findings support the importance of CEO financial experience in the provision of higher quality financial reporting.
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 The Impact of SOX on Earnings Management Activities Around CEO Turnovers by : Paul Geertsema
Download or read book The Impact of SOX on Earnings Management Activities Around CEO Turnovers written by Paul Geertsema and published by . This book was released on 2018 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: We assess the impact of the Sarbanes-Oxley Act (SOX) on discretionary accruals (DA) and real earnings management (REM) activities around CEO turnovers. Improved corporate governance post-SOX can either deter earnings management (the deterrence effect) or pressure CEOs to inflate earnings when facing imminent turnover risks (the pressure effect). We find a strong deterrence effect for new CEOs, while the pressure effect dominates the deterrence effect for outgoing CEOs. Pre-SOX firms with new CEOs manage earnings downward through both DA and REM and the effect is more pronounced in weakly governed firms. Post-SOX both types of earnings baths diminished. By contrast, post-SOX firms engage in more aggressive upward earnings management prior to CEO turnovers and the evidence is stronger prior to performance-induced CEO turnovers. The compulsory compliance with the 2003 NYSE and NASDAQ listing rule on audit committee independence is associated with a reduction in new-CEO REM baths.
Book Synopsis Earnings Management and Long-run Post-issue Performance of IPOs in India by : Mamta Dhanda
Download or read book Earnings Management and Long-run Post-issue Performance of IPOs in India written by Mamta Dhanda and published by . This book was released on 2020 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: The controversies surrounding accounting figures bring forth the downgraded quality of financial statements in India. Opportunistic management of earnings at the cost of stakeholders' interest requires prompt regulatory measure as they may become grave in high profile corporate events like mergers and public issues. Focusing on one of the most important mega events of initial public offerings (IPOs) the present study evaluates the accounting figure of IPOs that came out during April 2010 to March 2013. The study measures pre and post issue earnings management for a time span of 11 years from April 2008 to March 2019 and post issue long run earnings and stock performance using Modified Jones Model (1995) for a time span of seven years including issue year and six post issue years. The study provides evidence of earnings management by Indian IPO firms and post issue earnings and stock underperformance due to reversal of discretionary current accruals of issue year. The study emphasizes on better monitoring and regulatory environment and precise definition of accounting choices to control managed accounts to avoid frequent fraud incidents.
Book Synopsis Essays on IPO-firm Earnings Management by : Scott N. Bronson
Download or read book Essays on IPO-firm Earnings Management written by Scott N. Bronson and published by . This book was released on 2006 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt: PART 1 This paper provides evidence on the timing of earnings management behavior for initial public offering (IPO) firms in the annual periods surrounding the offering. It also examines whether this behavior is related to CEO and CFO trading after the offering. Using discretionary accruals as my proxy for earnings management, I find that, for firms that file a new 10-K before the trading restrictions provided in underwriter lockup agreements end, average IPO-firm discretionary accruals are significantly positive in the first 10-K filed after the offering, and that these discretionary accruals are significantly larger than those in the offering prospectus. I also find a positive relation between CEO and CFO trading activity and discretionary accruals for the same group of companies. Taken together, the results suggest that earnings management behavior is more prevalent in the first 10-K filed than in the offering prospectus, that it is concentrated in the firms that file this 10-K before their lockup period expires, and that it is positively related to CEO and CFO trading after the offering. PART 2 This paper examines whether earnings management behavior has decreased in the period following the passage of the Sarbanes-Oxley Act of 2002 (SOX) for IPO firms. It also explores how any changes I observe for IPOs relate to any changes that have occurred for the broader set of public companies. I find that IPO firms have experienced a significant decrease in earnings management after the passage of SOX. The results also provide evidence that this decrease is driven by the smallest public companies. While pre-SOX discretionary accruals for IPO firms are larger than those for non-IPO firms, I find that the post-SOX decrease in discretionary accruals results in the level of IPO-firm discretionary accruals becoming indistinguishable from that of non-IPO firms. Finally, the evidence suggests that the characteristics of post-SOX offerings are different from those of pre-SOX offerings, and that the decrease in discretionary accruals in the post-SOX period remains after controlling for these changes.
Book Synopsis Regulations, Earnings Management, and Post-IPO Performance by : Jennifer L. Kao
Download or read book Regulations, Earnings Management, and Post-IPO Performance written by Jennifer L. Kao and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we examine whether government regulatory initiatives in China involving IPO by SOEs may have contributed to opportunistic behaviors by the issuer. We focus on two sets of IPO regulations issued between January 1, 1996 and February 11, 1999: pricing regulations, which stipulate that IPO prices be a function of accounting performance, and penalty regulations, which penalize IPO firms for overly optimistic forecasts. We find that IPO firms that report better pricing-period accounting performance have larger declines in post-IPO profitability, lower first-day stock returns and worse long-run post-IPO stock performance. Furthermore, IPO firms that make overoptimistic forecasts also have lower first-day returns and worse post-IPO stock performance. Using non-core earnings as the proxy for earnings management, we document some evidence that IPO firms that report higher pricing-period accounting performance have engaged in more income-increasing earnings management. Hence, pricing regulations may have induced IPO firms to inflate pricing-period earnings and affect the post-IPO performance negatively. On the other hand, penalty regulations have deterred IPO firms from making overoptimistic earnings forecast and therefore have a positive impact on the behavior of IPO firms.
Book Synopsis Specialist CEOs and IPO Survival by : Dimitrios Gounopoulos
Download or read book Specialist CEOs and IPO Survival written by Dimitrios Gounopoulos and published by . This book was released on 2018 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the influence of specialist CEOs on the probability of failure and survivability of initial public offering (IPO) firms. We construct a generalist skills index based on CEOs' past employment history in order to classify CEOs into specialist and generalist ones. Specialist CEOs pursue a career in particular functional roles, firms and industry sectors, as opposed to generalist CEOs who accumulate their work experience through various positions, firms and industries. We uncover strong evidence that IPO firms with a specialist CEO have a lower probability of failure and a longer time to survive in subsequent periods following the offering. The findings suggest that specialist managerial ability has significant implications for post-issue performance of newly listed firms. Additionally, specialist CEOs may have incentives that are more aligned with those of the firm and its shareholders; thus, they are more likely to enhance the viability of IPO firms for a longer period of time.
Book Synopsis The Influence of Top-Management Characteristics on Corporate Credit Risk Measures by : Elias Fiebig
Download or read book The Influence of Top-Management Characteristics on Corporate Credit Risk Measures written by Elias Fiebig and published by GRIN Verlag. This book was released on 2016-08-03 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2016 in the subject Business economics - Business Management, Corporate Governance, grade: A, Copenhagen Business School (Department of Finance), language: English, abstract: Inspired by previous research this paper investigates whether personal CEO characteristics such as age, CEO tenure, gender, MBA and variable salary (%) have a significant effect on firm bankruptcy risk measured using the Altman-Z-Score and the Ohlson-O-Score. This work is based on literature suggesting (i) CEO managerial characteristics such as overconfidence and optimism lead to higher leverage and increased risk-taking and that (ii) higher levels of debt and increased risk-taking behavior add to the likelihood of corporate financial distress. Using panel data on S&P 500 constituents during 1994-2014 our results provide evidence that CEO age and holding an MBA is positively associated with bankruptcy risk while CEO tenure and variable salary (%) seem to be negatively related to a firm’s propensity to default. Collectively, our results remain mostly unchanged over various robustness tests employing both pooled OLS and the least squares dummy variable (LSDV) model as well as year, industry and company fixed effects as control variables. Next to significant support that managerial attributes, traits, and style may help to understand organizational outcomes, this project also provides insights how available public information can be used to further explain style effects by disentangling them into separate, measurable impact factors.
Book Synopsis Voluntary Disclosure of Management Earnings Forecasts in Ipos and the Impact on Underpricing and Post - Issue Return Performance by : Vijay M. Jog
Download or read book Voluntary Disclosure of Management Earnings Forecasts in Ipos and the Impact on Underpricing and Post - Issue Return Performance written by Vijay M. Jog and published by . This book was released on 1999 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Underpricing and post - issue return performance of Initial Public Offerings (IPOs) has long been a subject of extensive research and debate. While a variety of explanations for both have been put forward, asymmetric information between the owner/managers (insiders) and the investing public (outsiders) has factored as one of the main explanations. In this paper, we test for one mechanism designed to alleviate asymmetric information, namely, the voluntary disclosure of management earnings forecasts by issuers of IPOs. Our results indicate that the voluntary disclosure of forecasts has had a significant impact on both underpricing and post - issue return performance.
Book Synopsis The Use of Earnings and Operations Management to Avoid Credit Rating Downgrades by : Paula Hill
Download or read book The Use of Earnings and Operations Management to Avoid Credit Rating Downgrades written by Paula Hill and published by . This book was released on 2018 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms placed on negative credit watch face the threat of a credit rating downgrade. At the same time, they are given the opportunity to put recovery efforts in place to retain their current credit rating. In this paper, we test to what extent firms use earnings management as a short-term recovery strategy. We find that both accruals-based and real earnings management are associated with firms avoiding credit rating downgrades, and that these alternative earnings management strategies tend to be complements rather than substitutes. However, following the passage of the Sarbanes Oxley Act, only real earnings management is significantly associated with the credit watch outcome. We find evidence that firms which maintain their rating via earnings management are better able to afford the inevitable earnings reversals, and that in the year following the credit watch period the credit rating performance of these firms is significantly better than firms which undergo a downgrade, with fewer downgrades and more upgrades in this period. Our results also imply that credit rating agencies are not misled by earnings management but rather allow for some discretion in reporting earnings that facilitates the dissemination of private information about future firm performance.
Book Synopsis Earnings Management by : Joshua Ronen
Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Book Synopsis Chalk It Up to Experience by : Kourosh Amirkhani
Download or read book Chalk It Up to Experience written by Kourosh Amirkhani and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide evidence that firms managed by CEOs with high general ability, or broad experience in their background, are more likely to utilize discretionary accruals to manage earnings than CEOs with focused experience. Cross-sectional variation suggests that the mechanism underlying the increased use of discretionary accruals is generalist CEOs' increased willingness to bear the risk inherent in managing earnings given their enhanced tolerance for failure stemming from outside career options. Importantly, the practice is more pronounced for CEOs of firms with suspect earnings. The evidence suggests that the diversity of CEOs' experience influences incentives to manage earnings.
Book Synopsis Voluntary Disclosure of Management Earnings Forecasts in IPO Prospectuses by : Bruce J. McConomy
Download or read book Voluntary Disclosure of Management Earnings Forecasts in IPO Prospectuses written by Bruce J. McConomy and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetric information and mechanisms for its resolution in the initial public offering (IPO) process are subjects of extensive research and debate. In this paper, we investigate the impact of one such mechanism, namely voluntary disclosure of management earnings forecasts by issuers of IPOs, as a means of reducing asymmetric information as well as ex ante uncertainty. Our focus is on the relative importance of this voluntary disclosure mechanism on both IPO underpricing and post-issue return performance. Our results indicate that management earnings forecasts provide important and incremental information compared to other means of reducing asymmetric information, and these disclosures appear to improve the environment of IPO issuance. For example, our underpricing results show that firms that choose to provide forecasts leave quot;less money on the tablequot; with a lower degree of underpricing. In terms of post-issue performance, firms whose forecasts turn out to be optimistic are penalized significantly relative to other forecasters and non-forecasters.
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 Impact of Overlapping Financial Experts on Ceo Compensation, Pay-performance Sensitivity, and Earnings Management by : 陳惠文
Download or read book Impact of Overlapping Financial Experts on Ceo Compensation, Pay-performance Sensitivity, and Earnings Management written by 陳惠文 and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
