Author: Denis CormierPublisher:
ISBN:
Category :
Languages : en
Pages : 23
Book Description
Earnings Management Implications of Decisions by IPO Firms to Issue Forecasts
Author: Denis CormierForecasts in IPO Prospectuses
Author: Denis CormierPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
Prior research suggests that managers may use earnings management to meet voluntary earnings forecasts. We document the extent of earnings management undertaken within Canadian Initial Public Offerings (IPOs) and study the extent to which companies with better corporate governance systems are less likely to use earnings management to achieve their earnings forecasts. In addition, we test other factors that differentiate forecasting from non-forecasting firms, and assess the impact of forecasting and corporate governance on future cash flow prediction. We find that firms with better corporate governance are more likely to include a voluntary earnings forecast in their IPO prospectus. In addition, we find that corporate governance factors have an impact on the use of accruals management to meet forecasts, and on the predictive value of discretionary accruals.
The Impact of Earnings Forecasts on Accruals Management by IPO Firms
Author: Michel MagnanEarnings Forecasts Disclosure Regulation and Earnings Management by IPO Firms
Author: Bikki JaggiPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
This study examines whether a regulation on mandatory disclosure of earnings forecasts encourages managers to issue more optimistic earnings forecasts, and whether the optimistic forecasts are revised downward or the reported earnings are managed upward using discretionary accruals to reduce the forecast error. Additionally, it evaluates how investors react to earnings management and forecast revisions. The study is based on 760 forecasts issued by Taiwan IPO firms from 1991 to 2000 after the regulation to issue the earnings forecasts was imposed by the Taiwan Securities and Futures Exchange Commission (TSFEC) and it also uses a sample of 86 IPO firms prior to the issue of regulation. The results show that the IPO firms issue more optimistic forecasts than conservative forecasts. They adjust their reported earnings of optimistic forecasts upward with discretionary accruals more than revising the earnings forecasts downward, whereas they revise conservative forecasts upward more than adjusting the reported earnings downward. The results on the comparative analysis of earnings management by IPO firms before and after issuance of the TSFEC regulation provide additional support to the findings that earnings management by IPO firms increased significantly after the regulation was imposed. The results on investors' reaction to reported earnings show that investors reacted positively to higher reported earnings compared to the last revision of forecasts and they ignored the upward adjustment of reported earnings. Their reaction has been negative to downward revisions and positive to upward revisions.
Earnings Management
Author: Joshua RonenPublisher: Springer Science & Business Media
ISBN: 0387257713
Category : Business & Economics
Languages : en
Pages : 587
Book Description
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?
Earnings Management. The Influence of Real and Accrual-Based Earnings Management on Earnings Quality
Author: Publisher: GRIN Verlag
ISBN: 3964875953
Category : Business & Economics
Languages : en
Pages : 81
Book Description
Master's Thesis from the year 2019 in the subject Business economics - Accounting and Taxes, University of Duisburg-Essen, course: Master Thesis, language: English, abstract: This paper delves into various theories and approaches, aiming to define and differentiate earnings management from related concepts such as fraud, expectation management, and impression management. It explores the goals and incentives driving earnings management, including maximizing or minimizing earnings, beating targets, and smoothing. At the onset of the new millennium, corporate scandals rocked the business world, eroding trust in management, boards of directors, and the accounting profession. In response, regulations and policies aimed at enhancing corporate governance and financial reporting were swiftly implemented. The credibility, clarity, and consistency of financial reporting practices play a pivotal role in enabling investors to make informed decisions. Accurate and fair financial performance representations, as opposed to inflated and misleading figures, are essential for market players, including shareholders and creditors. Investors rely on audited financial reports to guide their investment decisions, underscoring the critical importance of accuracy and reliability in publicly available financial disclosures. Auditors, by reducing the risk of material misstatement, ensure the integrity of the information disclosed in a company's financial statements. Management, with the goal of achieving promised targets and ensuring the company's existence, may engage in earnings management as a strategic contribution to corporate policy. Financial reporting serves as a means to distinguish well-performing companies from their counterparts, facilitating efficient resource allocation and empowering stakeholders to make effective decisions. The disclosed earnings results significantly impact a firm's overall business activities and management decisions, particularly in satisfying analysts' expectations, which can influence equity value. While accounting standards play a role, the quality of financial statements is more influenced by company-specific and institutional factors shaping managers' incentives. These factors lead to financial reporting practices being viewed as the outcome of a cost-benefit assessment.
A Survey of the European IPO Market
Author: Voluntary Disclosure of Management Earnings Forecasts in IPO Prospectuses
Author: Bruce J. McConomyPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
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.
Capital Choices
Author: Michael E. PorterPublisher:
ISBN: 9780071034272
Category :
Languages : en
Pages :
Book Description
Capital Structure, Earnings Management, and Risk of Financial Distress
Author: Pietro GottardoPublisher: Springer
ISBN: 3030003442
Category : Business & Economics
Languages : en
Pages : 103
Book Description
This book analyzes the impacts that family control of firms has on capital structure choices, leverage and the risk of financial distress, earnings management practices, and the relation between accounting choices and firm market value. For these purposes, longitudinal data on Italian family and non-family non-financial firms are closely analyzed. The Italian setting is of special interest in this context because family businesses account for 94% of GDP, families are particularly committed to maintaining control of firms, and the economy is bank based rather than market based. The analyses draw on the socioemotional wealth approach, which emphasizes the importance of the stock of emotional value in family firms, in combination with financial theories such as Pecking Order Theory, Trade-off Theory, and Agency Theory. The findings cast significant new light on differences between family and non-family firms and the effects of different forms of family influence. The book will have broad appeal for academics, managers, practitioners, and policymakers.