Download or read book Pricing of Seasoned Equity Offers and Earnings Management written by Yongtae Kim and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the relationship between earnings management by firms offering seasoned equity issues and the pricing of their offers. We hypothesize that seasoned equity offering (SEO) firms employing aggressive accounting decisions also more aggressively push up their offer prices, thereby leading to a decrease in the degree of underpricing. Consistent with our prediction (the issuer's greed hypothesis), evidence indicates that SEO firms making opportunistic accounting decisions issue new shares at inflated prices. Our findings remain robust after controlling for other determinants of SEO underpricing and the possible endogeneity of pricing and earnings management.
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.
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:
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.
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.
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:
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:
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.
Download or read book The Timing and Consequences of Seasoned Equity Offerings written by Amy K. Dittmar and published by . This book was released on 2019 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: The likelihood of seasoned equity offerings (SEOs) jumps discontinuously when the stock price equals the most recent equity offer price. Anchoring on the last offer price holds after considering executive turnovers, stock splits, earnings management, or dividend adjustments. Using a fuzzy regression discontinuity design around this cutoff, which exploits local randomness in stock prices, we investigate the consequences of anchoring in SEOs. We find significant increases in cash holdings and acquisitions of lower quality, with no real effects on investment or employment. Overall, we provide some of the cleanest estimates, to date, of the timing and causal effects of SEOs.
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:
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:
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.
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:
Download or read book Disclosure and Earnings Management by Seasoned Equity Offering Firms written by Yongtae Kim and published by . This book was released on 2001 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Seasoned Equity Offerings written by Gemma Lee and published by . This book was released on 2009 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Flotation costs represent a significant loss of capital to firms and are positively related to information asymmetry between managers and outside investors. We measure a firm's information asymmetry by its accounting information quality based on two extensions of the Dechow and Dichev earnings accruals model (2002), which is a more direct approach to assessing the information available to outside investors than the more commonly used proxies. Our main hypothesis is that poor accounting information quality raises uncertainty about a firm's financial condition for outside investors, though not necessarily for insiders. This accounting effect lowers demand for a firm's new equity, thereby raising underwriting costs and risk. Using a large sample of seasoned equity offerings, we show that poor accounting information quality is associated with higher flotation costs in terms of (1) larger underwriting fees, (2) larger negative SEO announcement effects, and (3) a higher probability of SEO withdrawals. These results are robust to joint determination of offer size and flotation cost components and to adjustments for sample selection bias.
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:
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.
