Information uncertainty, earnings management, and long-run stock performance following initial public offerings
Journal
Journal of Business Finance and Accounting
Journal Volume
40
Journal Issue
9-10
Pages
1126-1154
Date Issued
2013-11
Author(s)
Abstract
We examine how information uncertainty surrounding IPO (initial public offering) firms influences earnings management and long-run stock performance. For low-information-uncertainty issuers, at-issue earnings' management is positively related to subsequent unmanaged earnings and has no relationship to market reaction to earnings announcement and long-run stock performance following the offering. For high-information-uncertainty issuers, however, at-issue earnings' management is unrelated to subsequent unmanaged earnings and negatively related to market reaction to earnings announcement and long-run stock performance following the offer. The evidence suggests that, on average, managers in low-information-uncertainty firms tend to engage in earnings' management for informative purposes, while managers in high-information-uncertainty firms engage in earnings' management for opportunistic purposes. © 2013 John Wiley & Sons Ltd.
Subjects
Earnings' management | Information uncertainty | Initial public offerings | Long-run stock performance
SDGs
Publisher
WILEY
Type
journal article