Article ID Journal Published Year Pages File Type
5093013 Journal of Contemporary Accounting & Economics 2006 26 Pages PDF
Abstract

This paper examines the use of discretionary current accruals by firms that make seasoned equity offers (SEOs). We find evidence suggesting that firms borrow future income to manage earnings in pre-issue years and consequently earnings decrease in post-issue year 2. However, we find no evidence that pre-issue discretionary accruals affect future stock returns. We find evidence that family-owned firms are more likely to use positive discretionary accruals prior to making an SEO, independent directors and outside blockholders constrain earnings management in family-controlled firms and SEO firms that have a larger board size have a higher degree of earnings management around SEOs.

Related Topics
Social Sciences and Humanities Business, Management and Accounting Business, Management and Accounting (General)
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