Information Uncertainty, Earnings Management, and Long-run Stock Performance Following Initial Public Offerings

2013 ◽  
Vol 40 (9-10) ◽  
pp. 1126-1154 ◽  
Author(s):  
Sheng-Syan Chen ◽  
Wen-Chun Lin ◽  
Shao-Chi Chang ◽  
Chih-Yen Lin
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Information Uncertainty ◽  
Stock Performance ◽  
Public Offerings ◽  
Long Run

scholarly journals Earnings Management and Performance of IPO Firms: Evidence from India

2019 ◽  
Vol 12 (1) ◽  
pp. 39-58
Author(s):  
Deepa Mangala ◽  
Mamta Dhanda
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Coming Out ◽  
Developed Countries ◽  
Annual Reports ◽  
Financial Reports ◽  
Public Issues ◽  
Public Offerings ◽  
Long Run ◽  
Earnings Performance

Disclosure through corporate annual reports is intended to enhance transparency and reduce information asymmetry during public issues. Ritter (1991) revealed that there is something fishy in the financial reports of the companies coming out with public issues. Earnings management has been recognised as a foremost contributor to such misleading financial reports. The short term overperformance of initial public offerings (IPO) of companies increases the expectations of potential investors and leads to a subsequent decline of performance in long run leaving the investors in distraught. The observed phenomenon is omnipresent and thus affects the investors across the globe. The present article empirically investigates the presence of earnings management in IPOs in India. The study is based on Modified Jones Model, the best known model to measure accruals earnings management. Preliminary results exhibit that earnings management in Indian IPOs is much higher than in developed countries. The study further discovers that the earnings performance of IPO companies is abnormally higher in IPO year as compared with post-offer period. Both the results taken together reinforce that post-issue earnings performance is a derivation of issue year earnings management in India.

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