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.

Download or read book Earnings Management and the Long Term Market Performance of Initial Public Offerings written by Siew Hong Teoh and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine empirically whether earnings management as measured by discretionary accounting accruals explain post-issue stock return underperformance for IPO firms. We find that high discretionary accounting accruals are related to negative abnormal stock returns with high statistical significance. For example, a trading strategy of a short position in IPO firms with high discretionary accruals and a long position in IPOs with low discretionary accruals result in a mean (median) excess return of 102% (83.5%) in the 36-month period beginning after the first fiscal year end of the IPO. The evidence is consistent with Ritter's [1991] conjecture that investors are systematically overoptimistic about the growth prospects of IPO firms. The high discretionary accounting accruals seem to be associated with initial overoptimism of investors with subsequent revelations about the appropriateness of the accruals causing a subsequent downward revision in stock prices.

Download or read book Ownership Structure and Operating Performance of IPOs in India written by Shikha Bhatia and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The anomalous behavior of Initial Public Offerings (IPOs) has been extensively researched and debated. Numerous studies have documented stock price and operating underperformance of IPOs and suggested several reasons like earnings management, timing of issues, agency theory, etc., as causing such decline in post-issue performance. This study attempts to examine the operating performance of IPOs in India for a period of five years subsequent to the issue. It specifically seeks to analyze the post-issue operating performance relative to pre-issue levels and to determine the relationship between ownership retained by the promoters and operating performance of issuing firms.

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.

Download or read book Earnings Management and Performance of Indian Equity Rights Issues written by Narayan Rao Sapar and published by . This book was released on 2008 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Earnings management occurs when managers use judgment in financial reporting and in structural transactions to alter financial reports to either mislead some stakeholders about the underlying performance of the company, or to influence contractual outcomes that depend on reported financial performance. Many research studies are conducted to investigate the earnings management in developed economies. Due to regulated operating environment of in India until 1992 earnings management was not a fertile topic for research. But, post-1992 companies are given freedom to price their capital issues. This freedom motivates the issuers to manage their earnings prior to capital issues.The objectives of the study are to investigate if firms in India manage earnings prior to launching of equity rights issues (known as seasoned equity offerings in the USA and Europe) and the post issue performance of the firms. We used discretionary current accruals (DCAs) to measure the extent of earnings management. Modified Jones Model is used to estimate DCAs during three years prior to the rights issue (pre-issue period) and three years after the rights issue (post-issue period). DCAs of rights issue firms are adjusted for DCAs of control sample (non-rights issuers).Adjusted mean DCAs of pre-issue period is compared with adjusted mean DCAs of the post-issue period to detect earnings management. The results suggest that there has been earnings management prior to the rights issues. Analysis of pre-and-post issue performance the sample firms corroborate the findings based on DCAs. Study period is 1993-94 to 2003-04. Sample size is 259.

Download or read book Earnings Management and the Long Run Performance of Spanish Initial Public Offerings written by Maria J. Pastor-Llorca and published by . This book was released on 2006 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: The poor stock price performance of firms conducting initial public offerings is one of the recent puzzles in financial literature. We detect this market anomaly for Spanish IPO firms and we investigate whether earnings management around the time of the offering can explain these results. Consistent with this explanation, we notice that issuing firms make use of discretionary accruals to report higher earnings in the IPO year. Moreover, firms with higher level of discretionary accruals experience more negative long-run abnormal returns. Thus, this evidence suggests that opportunistic earnings management explains, at least partially, the IPO anomaly in Spain.

Download or read book The Impact of Lockup Period on Survival Long run Performance and Earnings Management of IPOs in UK written by Wasim Ahmad and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Post Issue Operating Performance of Indian IPO Firms written by Shikha Bhatia and published by . This book was released on 2017 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the change in post-issue operating performance of 300 Indian IPO firms over a three-year period relative to their pre-issue levels. Further, it explores, whether the issuing firms signal their value at the time of issue through underpricing and whether operating performance of issuing firms is reflected in their long-run stock price performance. The accounting ratios have been used as the proxy for the long-run performance of the issuing firms. Using several performance measures, it has been found that IPO firms are not able to sustain the pre-IPO levels of profitability in the after-market period.

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:

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:

Download or read book Earnings Management in Malaysian IPOs written by Nurwati A. Ahmad-Zaluki and published by . This book was released on 2009 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper provides general evidence of income-increasing earnings management in Malaysian IPOs but this occurs primarily during a period of severe economic stress (the East Asian crisis). The requirement to provide a profit guarantee appears to reduce rather than encourage earnings management. Within this high ownership concentration market, ownership concerns also appear to constrain IPO earnings management. Owners are willing to forego 'opportunistic' earnings management and signalling opportunities to increase their likelihood of retaining control of the company post-IPO. IPO companies engaging in aggressive earnings management have significantly worse market-based performance than their more conservative counterparts, but only during the economic crisis period.

Download or read book Global Business Strategy written by Kazuyuki Motohashi and published by Springer. This book was released on 2015-03-25 with total page 265 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents theories and case studies for corporations in developed nations, including Japan, for designing strategies to maximize opportunities and minimize threats in business expansion into developing nations. The case studies featured here focus on Asia, including China and India, and use examples of Japanese manufacturers. Five case studies are provided, including Hitachi Construction Machinery and Shiseido in China and Maruti Suzuki in India. These cases facilitate the reader’s understanding of the business environments in emerging economies. This volume is especially recommended for business people responsible for international business development, particularly in China and India. In addition, the book serves as a useful resource for students in graduate-level courses in international management.

Download or read book Handbook of Research on IPOs written by Mario Levis and published by Edward Elgar Publishing. This book was released on 2013-11-29 with total page 599 pages. Available in PDF, EPUB and Kindle. Book excerpt: The chapters offer some important new insights into issues that will be of interest not only to the academic community but also to professionals involved in the preparation, structure and execution of such transactions, market regulators, and private a

Download or read book A Study on the Long Run Performance of Initial Public Offerings in India written by Shikha Bhatia and published by . This book was released on 2017 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the long run performance of 438 initial public offerings in India that got listed on the Bombay Stock Exchange from 1992 to 2001. It further attempts to identify the factors explaining the long-run performance of IPO firms. The cumulative abnormal return at the end of fifth year is 184.64% which is very high in contrast with the returns observed in the developed countries. Substantial variations have been observed across firms belonging to different age groups and industries. Variations in performance of IPO firms is also evident when firms are segmented according to their initial returns, issue price and issue size. Initial returns, issue size and market conditions primarily explain variations in long run performance of Indian IPOs.

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.

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.

Download or read book Post Issue Performance of IPOs in India written by Sudesh Kumar Sharma and published by . This book was released on 2013 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: Initial Public Offers (IPOs) market is considered to be the safest way to invest in the stocks and it also assures profits due to underpricing. Therefore, it attracts every type of investors and very particularly the retail investors. However, gaps do appear in perceived profits and the actual profits. Expectations have been built around some sector stocks such as Public sector - considered as safe bet; Petrochemical and Infrastructure sector stocks - for assured long term appreciation; Finance and IT sector for quick profits, etc. This study is an attempt to capture the performance of IPOs across different sectors, over different time frames, to identify the performing sectors and the effect of the non-performing IPOs. Our results indicate that public sector stocks outperform all other sector stocks during short as well as long term period. Manufacturing sector stocks appear to be least performing stocks during short as well as long term duration. Further, if non-performing IPOs could be checked out, there would be substantial gains for the investors. We expect our study to serve as a guiding tool for retail investors to enable them to focus their investments.