Earnings Management During Lockup in Explaining IPO Operating Underperformance

2015 ◽  
Vol 18 (01) ◽  
pp. 1550002 ◽  
Author(s):  
Tsai-Ling Liao ◽  
Chih-Jen Huang ◽  
Hsiao-Chi Liu
Keyword(s):  
Earnings Management ◽  
Initial Public Offering ◽  
High Tech ◽  
Return On Assets ◽  
Management Behavior ◽  
Reversal Effect ◽  
Public Offering ◽  
Lockup Expiration ◽  
The Relationship

This study examines the relationship between initial public offering (IPO) managers' earnings management behavior during lockup (measured with discretionary accruals, DAs) and operating performance following lockup expiration (measured with operating return on assets, OPROAs). Based on a U.S. IPO sample, the results indicate that DAs during lockup are significantly higher than after lockup expiration. In addition, the reversal effect of DAs results in a negative association of DAs in lockup with post-lockup OPROAs. This negative relation is primarily concentrated in small-sized, non-venture backed, high-tech, and hot-market issued IPOs and is consistent with prior findings that such IPO firms have poorer post-issue performance. The overall evidence supports the role of managerial earnings management behavior during lockup in explaining post-IPO operating underperformance.

scholarly journals MANAJEMEN LABA, RETURN SAHAM, DAN KINERJA OPERASI SEBAGAI PEMODERASI

2017 ◽  
Vol 15 (2) ◽  
pp. 133
Author(s):  
Farid Addy Sumantri ◽  
Purnamawati .
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Stock Return ◽  
Operating Performance ◽  
Abnormal Returns ◽  
Return On Assets ◽  
One Year ◽  
Public Offering ◽  
The Relationship

<p><em>The purpose of this study was to determine the indications of the practice of earnings management at the time of the IPO, one year after the IPO, and two years after the IPO. This study also examined the effect of earnings management on stock returns and operating performance in moderating the relationship between earnings management and stock returns.</em></p><p><em>The study sample comprised 33 firms that go public in the year 2007 to 2011 using a purposive sampling method. Earnings management is proxied by discretionary accruals using the Modified Jones Model, which used proxy for the stock return is cummulative abnormal returns (CAR), while for the company's operating performance used proxy for the return on assets (ROA).</em></p><p><em>The results showed that there were indications of earnings management at the time of the IPO, one year after the IPO, and two years after the IPO with a lower profit rate. No effect on earnings management is proxied by stock return cummulative abnormal returns (CAR). Operating performance of the company also can not moderate the relationship between earnings management with stock return.</em></p><p><em> </em></p><p><em>Keywords: Earning Management, Initial Public Offering, Cummulative Abnormal Return, </em><em>Return On Asset</em></p>

scholarly journals MANAJEMEN LABA, RETURN SAHAM, DAN KINERJA OPERASI SEBAGAI PEMODERASI

2017 ◽  
Vol 13 (2) ◽  
pp. 61 ◽  
Author(s):  
Farid Addy Sumantri ◽  
Purnamawati ,
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Stock Return ◽  
Operating Performance ◽  
Abnormal Returns ◽  
Return On Assets ◽  
One Year ◽  
Public Offering ◽  
The Relationship

<p>The purpose of this study was to determine the indications of the practice of earnings<br />management at the time of the IPO, one year after the IPO, and two years after the<br />IPO. This study also examined the effect of earnings management on stock returns<br />and operating performance in moderating the relationship between earnings<br />management and stock returns.<br />The study sample comprised 33 firms that go public in the year 2007 to 2011 using<br />a purposive sampling method. Earnings management is proxied by discretionary<br />accruals using the Modified Jones Model, which used proxy for the stock return is<br />cummulative abnormal returns (CAR), while for the company’s operating<br />performance used proxy for the return on assets (ROA).<br />The results showed that there were indications of earnings management at the time<br />of the IPO, one year after the IPO, and two years after the IPO with a lower profit<br />rate. No effect on earnings management is proxied by stock return cummulative<br />abnormal returns (CAR). Operating performance of the company also can not<br />moderate the relationship between earnings management with stock return.<br />Keywords: Earning Management, Initial Public Offering, Cummulative Abnormal<br />Return, Return On Asset</p>

scholarly journals Examining affective and cognitive discourse at the time of IPO: Effects on underpricing and the moderating role of entrepreneurial orientation

2016 ◽  
Vol 19 (2) ◽  
pp. 13-25 ◽  
Author(s):  
William Wales ◽  
Fariss-Terry Mousa
Keyword(s):  
Initial Public Offering ◽  
Entrepreneurial Orientation ◽  
Time Span ◽  
High Tech ◽  
Negative Effects ◽  
Cognitive Rhetoric ◽  
Initial Support ◽  
Public Offering ◽  
Moderating Role

This study presents evidence concerning the effects of affective and cognitive rhetoric on the underpricing of firms at the time of their initial public offering. It is suggested that firms that use less affective, and more cognitively oriented discourse in their IPO prospectus will experience better underpricing outcomes. We examine these assertions using a sample of young high-tech IPO firms where investors rely on prospectuses as accurate and informative firm communications. Results from a robust five-year time span observe initial support for the hypothesized effects. Moreover, the signaling of a higher degree of entrepreneurial orientation in the firm prospectus is found to worsen the negative effects of affective discourse

Earnings Management and IPO Anomalies—Evidence from Indian Stock Market

2021 ◽  
pp. 227853372199471
Author(s):  
Aprajita Pandey ◽  
J. K. Pattanayak
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Public Offering ◽  
High Level ◽  
Long Term Performance ◽  
Indian Stock Market ◽  
Term Performance ◽  
The Relationship

This study examines the relationship between the extent of earnings management in a firm, the level of underpricing during an initial public offering (IPO), and their long-term performance. Earnings management has been acknowledged as a matter of concern during IPOs since long; however, its relationship with underpricing and long-term returns remained inconclusive in emerging markets like India. Using a sample of Indian IPO firms, this study finds that firms that manage accruals aggressively in the pre-IPO period have high initial returns and subsequently low stock returns in the post-IPO period. This study also observed that firms that have used abnormal accruals more conservatively while reporting earnings have better returns in the third year after IPO compared to the firms that reported more aggressively. The results are in consonance with the theory of information asymmetry and suggest that valuation of an IPO firm becomes ambiguous with high level of earnings management, which leads to higher underpricing.

Friends in high places : two essays on the importance of corporate political connections

2015 ◽  
Author(s):  
◽  
Reza Houston
Keyword(s):  
Initial Public Offering ◽  
Political Connections ◽  
Target Firm ◽  
University Of Missouri ◽  
Accounting Performance ◽  
The Public ◽  
Public Offering ◽  
The University ◽  
The Impact ◽  
The Relationship

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] This study is an examination of the relationship between political connections and the undertaking of major firm events. In our first essay, presented in Chapter 3, we examine the impact politically connected appointments have on firm acquisition behavior. Using proxy statements, we create a unique database of politically connected bidders and merger targets. We find that bidders who hire connected individuals to the board or management team are more likely to avoid merger litigation. Connected bidders make more bids after the appointment. These firms also bid on larger targets. We determine there is a positive relation between the control premium and the relative of the target's connections. Connected acquirers have superior post-merger accounting performance, particularly when they acquire a connected target firm. In the second essay, presented in Chapter 4, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we create a unique database of politically connected IPO firms. We find that political connections are substitutes to high-quality underwriters and big four auditors. Politically connected firms manage earnings more highly upward than non-connected firms prior to the public offering. Politically connected firms also exhibit less underpricing than non-connected firms. Politically connected IPO firms also have superior post-IPO returns relative to non-connected IPO firms.

scholarly journals Strategic Alliances And New Product Development In High-Tech Ventures: The Moderating Role Of Alliance Type And Alliance Capability

2019 ◽  
Vol 35 (1) ◽  
pp. 17-28
Author(s):  
Sang-Mi Moon ◽  
Moon-Goo Huh
Keyword(s):  
New Product Development ◽  
Strategic Alliances ◽  
Superior Performance ◽  
High Tech ◽  
Entrepreneurial Firms ◽  
Alliance Management ◽  
Management Capability ◽  
Alliance Management Capability ◽  
The Relationship

Strategy scholars have proposed that capacity for managing alliance can be a source of superior performance. This study focuses on the role of this capacity, and investigates how alliance management capability of entrepreneurial firms affects the relationship between a firm’s allying and its performance. Because the capability is inherently unobservable, we take alliance experience and average duration of each alliance as proxy variables for measuring alliance management capability. An analysis of multiple allies of entrepreneurial ventures in Korean photovoltaic industry indicate that capacity for managing varying allies, and alliance type positively moderate the relation between alliance and its innovation outcomes.

To quit or not to quit

2018 ◽  
Vol 47 (5) ◽  
pp. 1062-1076 ◽  
Author(s):  
Sheng-Wuu Joe ◽  
Wei-Ting Hung ◽  
Chou-Kang Chiu ◽  
Chieh-Peng Lin ◽  
Ya-Chu Hsu
Keyword(s):  
Social Identity Theory ◽  
Organizational Identification ◽  
Turnover Intention ◽  
Ethical Climate ◽  
Three Dimensions ◽  
High Tech ◽  
Questionnaire Response ◽  
Content Type ◽  
The Relationship

Purpose To deepen our understanding about the development of turnover intention, the purpose of this paper is to develop a model that explains how ethical climate influences turnover intention based on the ethical climate theory and social identity theory. Design/methodology/approach The hypotheses of this study were statistically tested using a survey of working professionals from Taiwan’s high-tech industry. Of the 400 questionnaires distributed to the working professionals from five large high-tech firms in a well-known science park in Northern Taiwan, 352 usable questionnaires were returned for a questionnaire response rate of 88 percent. Findings The test results of this study first show that all three dimensions of ethical climate (i.e. instrumental, benevolent, and principled) are indirectly related to turnover intention via the mediation of firm attractiveness. Moreover, instrumental and benevolent climate directly relate to turnover intention, whereas benevolent climate negatively moderates the relationship between principled climate and firm attractiveness. Originality/value This study finds that benevolent climate plays a dual role as an antecedent and a moderator in the formation of turnover intention, complementing prior studies that merely concentrate on the single role of benevolent climate as either an antecedent or a moderator. The effect of principled climate on organizational identification complements the theoretical discussion by Victor and Cullen (1987) about deontology in which an ethical workplace climate (such as legitimacy) drives employees to invest in identity attachments to the organization and influences their future career decision (e.g. turnover).

An Investigation to an Enabling Role of Knowledge Management Between Learning Organization and Organizational Learning

2011 ◽  
pp. 1579-1594
Author(s):  
Juin-Cherng Lu ◽  
Chia-Wen Tsai
Keyword(s):  
Knowledge Management ◽  
Organizational Learning ◽  
Learning Organization ◽  
Current Knowledge ◽  
Business Environment ◽  
High Tech ◽  
Management Processes ◽  
Exploratory Investigation ◽  
The Relationship

This chapter is an exploratory investigation of the relationship and interaction between the learning organization and organizational learning in terms of an enabling role of knowledge management. In the severe and dynamic business environment, organizations should respond quickly to their rivals and environment by transforming into a learning organization. A learning organization could provoke innovation and learning through its structure, task and process redesigns, and evermore adapt gradually toward the eventual goal of organizational learning. Therefore, the dynamic process between the learning organization and organizational learning is an important issue of current knowledge management and practice — that is, the enabling role of knowledge management could enhance the interaction between learning organization and organizational learning. Furthermore, the authors will explore the relationship and interaction between the learning organization and organizational learning in terms of knowledge management processes in business. Two cases, TSMC and Winbond, the semiconductor and high-tech firms in Taiwan, will be studied to illustrate the findings and insights for the study and the chapter.

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