Firm diversification and earnings management: Evidence from seasoned equity offerings

被引：23
作者：
Lim C.Y. [1 ]
Thong T.Y. [2 ]
Ding D.K. [3 ]
机构：
[1] Nanyang Business School, Nanyang Technological University
[2] School of Business, SIM University
[3] Department of Finance, Lee Kong Chian School of Business, Singapore Management University, Singapore 178899
来源：
Review of Quantitative Finance and Accounting | 2008年 / 30卷 / 1期
关键词：
Accruals; Corporate diversification; Earnings management; Seasoned equity offerings; Stock market performance;
D O I：
10.1007/s11156-007-0043-x
中图分类号：
学科分类号：
摘要：
Popular press suggests that diversified firms are more aggressive in managing earnings than non-diversified firms. We examine this claim in the seasoned equity offering (SEO) setting, where firms have been shown to have the incentive to manage earnings upwards. Using the cross-sectional modified Jones [(1991) J Accounting Res 29:193-228] model to measure discretionary current accruals, we find that discretionary current accruals are higher among diversified firms than in non-diversified ones. Our evidence is consistent with the view that the extent of firm diversification is directly related to the degree of earnings management. We further show that diversified issuers with high discretionary accruals underperformed other SEO firms. © 2007 Springer Science+Business Media, LLC.
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页码：69 / 92
页数：23
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