Post-Initial Public Offering Earnings Management Driven by Insider Selling Motives: Using KOSDAQ Initial Public Offerings

2011 ◽  
Vol 40 (5) ◽  
pp. 627-657 ◽  
Author(s):  
Youngsoon S. Cheon ◽  
Moonchul Kim ◽  
Munho Hwang
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Public Offerings ◽  
Public Offering

scholarly journals Real and Accrual Earnings Management around Initial Public Offerings in Jordan

2017 ◽  
Vol 11 (1) ◽  
pp. 204 ◽  
Author(s):  
Mohammad M. Alhadab
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Earnings Manipulation ◽  
Net Income ◽  
Public Offerings ◽  
Public Offering ◽  
New Evidence

This study examines whether Initial Public Offering (IPO) firms in Jordan utilize real activities and accruals accounting during the offering year to manipulate income. To date the current study is the first to examine real activities and accrual earnings management that undertaken by IPO firms in Jordan. Using a Jordanian sample of 41 IPO firms over the period between 2000 and 2011, this study provides new evidence to the literature that IPO firms in Jordan utilize real activities and accruals accounting to inflate net income that is reported during the offering year. In particular, the findings of current study show that IPO firms report a higher level of earnings manipulation during the offering year that conducted via accrual-based earnings management, sales-based, discretionary expenses-based, and the aggregated measure-based of real activities.

Earnings Management and the Pricing of Initial Public Offerings

2007 ◽  
Vol 10 (04) ◽  
pp. 541-559 ◽  
Author(s):  
Kyoko Nagata ◽  
Toyohiko Hachiya
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Ipo Underpricing ◽  
Earnings Growth ◽  
Public Offerings ◽  
Public Offering

This study investigates whether the extent of earnings management has any impact on offer price in initial public offering (IPO). Using a sample of 581 JASDAQ IPO firms, we find that offer price reflects earnings management to some extent. Firms with conservative earnings management tend to have higher offer prices, and firms managing earnings aggressively tend to be discounted when they fail to exhibit smooth earnings growth. These results are consistent with the hypothesis that underwriters adjust for the effect of earnings management to appropriately pricing the issues. Overall, our evidence could lead to another explanation for IPO underpricing.

scholarly journals Manajemen Laba pada Periode Initial Public Offering dan Dampaknya pada Persistensi Laba

2020 ◽  
Vol 30 (11) ◽  
pp. 2922
Author(s):  
Hansen Halim ◽  
Stevanus Pangestu
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Statistical Analyses ◽  
Real Earnings Management ◽  
Earnings Persistence ◽  
Accrual Accounting ◽  
Public Offerings ◽  
Subsequent Period ◽  
Public Offering

The paper examinse whether Indonesian corporations manage their earnings through real activities and accrual accounting during their initial public offerings. We also investigate the effect of this IPO earnings management on earnings persistence in the subsequent period. Seventy-three non-financial IPOs during 2014-2017 were taken as research sample. Afer a series of statistical analyses, we find that companies that went public committed both real and accrual earnings management to inflate income figures in their IPO year. Furthermore, we also find that accrual earnings management negatively affects earning persistence, whereas real earnings management positively affects earnings persistence. Keywords: IPO; Earnings Management; Earnings Persistence, Go Public.

scholarly journals An empirical study of IPO underpricing: Evidence from Chinese stock market

2014 ◽  
Vol 12 (1) ◽  
pp. 139-152 ◽  
Author(s):  
Tianxiang Xu ◽  
Yujie Zhao
Keyword(s):  
Empirical Study ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Chinese Stock Market ◽  
Short Term ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Public Offering ◽  
Different Characteristics

Initial public offerings, as one of the most important activities for firms, have raising massive amount of researches. Regarding China, the stock markets are experiencing a massive level of IPO underpricing, which leads to trillions of dollars leaved on the table. This study is conducted for the question why Chinese IPO are so heavily underpriced and the determinants of IPO underpricing, also the possibility of IPO be underpriced in China. We confirm again that Chinese IPOs are heavily underpriced and the average underpricing level is about 110%. Further, Chinese IPO will experience a negative short term return starting from 10 days after listing, and there are significantly different characteristics for state owned IPOs and private IPOs. This study finds that information asymmetry, proportion of state owned share and risk are the mainly determinants of IPO underpricing in China. Additionally, one of the biggest reason that Chinese initial public offering is underpriced so much is because of government participation, since we find that firms with larger proportion of government state owned shares will be more underpriced.

Survival of Initial Public Offerings on Europe’s New Stock Markets

2018 ◽  
pp. 533-558 ◽  
Author(s):  
Tao Jiao ◽  
Peter Roosenboom ◽  
Giancarlo Giudici
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Stock Markets ◽  
Early Stage ◽  
High Growth ◽  
Barriers To Entry ◽  
Main Hypothesis ◽  
Public Offerings ◽  
Similar Survival ◽  
Public Offering

Nearly 20 competing new stock markets opened their doors in 12 Western European countries during 1995–2005. These stock markets copied the NASDAQ model, with low barriers to entry and tight disclosure rules, and had one common aim—to attract untested, early stage, innovative, and high-growth small and medium-sized enterprises (SMEs). The main hypothesis of this chapter is that by setting the entry barriers too low, these new markets risked attracting too many low-quality firms, creating a “lemons problem” that negatively impacted the survival prospects of all firms listed on that market. The key finding is that the initial public offering (IPO) firm failure on six of these new stock markets is almost double the IPO firm failure on long-established official stock markets with more stringent listing requirements. The exception is the unregulated Alternative Investments Market, where firms have similar survival prospects compared to companies listing on London’s Official List.

The Relationship between Boards of Directors and Initial Public Offerings in the Biotechnology Industry

1998 ◽  
Vol 22 (3) ◽  
pp. 5-29 ◽  
Author(s):  
Todd A. Finkle
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Biotechnology Industry ◽  
Public Offerings ◽  
Biotechnology Firms ◽  
The Board Of Directors ◽  
And Performance ◽  
Public Offering ◽  
Performance Results

Utilizing the entire population of public biotechnology firms from 1980-1994, three models were tested to determine If a relationship exists between the size and composition of the board of directors and performance. Results indicate significant positive relationships between director expertise and the size of a firm's initial public offering. Going public during hot markets and larger firms were also related to larger Initial public offerings. These findings will benefit practitioners in the formation of boards within the biotechnology Industry. Managers of firms within the biotechnology industry who are contemplating a public offering will be able to proactively address the composition of their boards.

INITIAL PUBLIC OFFERINGS AND PRE-IPO SHAREHOLDERS: ANGELS VERSUS VENTURE CAPITALISTS

2012 ◽  
Vol 17 (04) ◽  
pp. 1250022 ◽  
Author(s):  
WILLIAM C. JOHNSON ◽  
JEFFREY E. SOHL
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Early Stage ◽  
Equity Capital ◽  
Venture Capitalists ◽  
Public Offerings ◽  
Corporate Investors ◽  
Public Offering ◽  
Angel Investors

At the time of an initial public offering, shares in a firm are typically held by venture capitalists, insiders, corporate investors and angel investors. We examine the role of angel investors in the IPO process. We find that angel investors provide equity capital in industries venture capitalists are less likely to serve and that shareholders in angel backed IPO firms are more likely to sell their shares at the time of the offering. Where venture capital backed IPO firms have higher underpricing, angel backed IPO firms do not, implying that angels may be the preferred investors for early-stage firms.

Assessing the Impact of Customer Concentration on Initial Public Offering and Balance Sheet–Based Outcomes

2017 ◽  
Vol 81 (6) ◽  
pp. 42-61 ◽  
Author(s):  
Alok R. Saboo ◽  
V. Kumar ◽  
Ankit Anand
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Balance Sheet ◽  
Performance Outcomes ◽  
Customer Relationships ◽  
Negative Effects ◽  
Public Offerings ◽  
Prior Literature ◽  
Public Offering ◽  
The Impact

Using the notion of customer concentration, the authors argue that firms should evenly spread their revenues across their customers, rather than focusing on a few major customer relationships. Prior literature suggests that major customers improve efficiency and provide access to resources, thereby producing positive performance outcomes. However, building on industrial organizational literature and modern portfolio theory, the authors argue that concentration of revenues reduces the supplier firm's bargaining power relative to its customers and hurts the ability of the supplier firm to appropriate value, which, in turn, hurts profits. Using a sample of 1,023 initial public offerings (IPOs) and robust econometric methods, they find that customer concentration reduces investor uncertainty and positively impacts IPO outcomes, but significantly hurts balance sheet–based outcomes (e.g., profitability). The results suggest that a 10% increase in customer concentration reduces profitability by 3.35% (or about $7 million) in the subsequent year, or 9.4% cumulatively over the next four years (or about $20.32 million). Further, the authors find that the negative effects of customer concentration decrease with increase in organizational (marketing, technological, and operational) capabilities and increase with low customer credit quality.

scholarly journals CAN ACCOUNTING INFORMATION ACT AS A PROXY FOR EX ANTE UNCERTAINTY IN INITIAL PUBLIC OFFERINGS?

2003 ◽  
Vol 5 (2) ◽  
pp. 249 ◽  
Author(s):  
Tatang Ary Gumanti
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Accounting Information ◽  
Firm Risk ◽  
Public Offerings ◽  
Accounting Numbers ◽  
Ex Ante ◽  
Value Of Firm ◽  
Public Offering

This paper reviews and summarizes previous works and the rationale for the proposition that accounting information is in fact value relevant in the determination of an initial public offering IPO).Theoretical and empirical evidence has indicated that certain accounting measures can he used as proxies for total firm risk, that is, they could determine the riskiness of a corporation. The literature also advocates that accounting information is relevant in determining the value and thus the riskiness of a corporation through the use of accounting analysis. Since most of the information available in the prospectus is accounting information, it is arguable that this information represents a potential source for assessing the issuing firm. Some scholars have also advocated the possibility of using accounting information in assessing the value of firm making an IPO. Numerous papers have provided analytical and empirical evidence of the association between accounting numbers and the value of IPOs. The conclusion generally comes to show that information in the prospectus is value relevant concerning the IPO. The paper shows that it is indeed an arguable to use accounting information in the valuation of an IPO. Accordingly, it is an empirical issue whether accounting information has the property in explaining the ex-ante uncertainty of an IPO.

scholarly journals Signalling, Insider Trading, And Post-Offering Performance: The Case Of Initial Public Offerings

2011 ◽  
Vol 9 (3) ◽  
pp. 80 ◽  
Author(s):  
Thomas H. Eyssell ◽  
Donald R. Kummer
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Insider Trading ◽  
Going Public ◽  
Public Offerings ◽  
Corporate Insiders ◽  
Ipo Pricing ◽  
Public Offering

Previous IPO studies have concluded that, on average, (1) the shares of firms going public are underpriced at the time of the offering, (2) prices adjust rapidly in the aftermarket, and (3) IPOs are generally poor performers over the longer-term. This study reevaluates the IPO pricing phenomenon utilizing more recent data and empirically tests the signaling models of Leland and Pyle (1977) and Gale and Stiglitz (1989), which imply that both first-day and aftermarket returns may be related to insiders transactions. Our results suggest that initial returns are inversely related to the proportion of the offering representing insiders share and that corporate insiders are, on average, net sellers in the year subsequent to the initial public offering. We also find that the greatest volume of post-offering insider sales occurs in those firms in which insiders are sold shares at the offering.

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