Accrual-based and real earnings management activities around seasoned equity offerings
AbstractWe show that SEO firms engage in real activities manipulation, and the decline in post-SEO performance due to the real activities management is more severe than that due to accrual management. Our evidence is important, because it shows that post-SEO operating underperformance is driven not just by accrual reversals, but also reflects the real consequences of operational decisions made to manage earnings. We also show how firms' choices of real versus accrual-based earnings management activities around SEOs vary predictably as a function of the firm's ability to use accrual management and the costs of doing so.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Accounting and Economics.
Volume (Year): 50 (2010)
Issue (Month): 1 (May)
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Web page: http://www.elsevier.com/locate/jae
Seasoned equity offerings Earnings management Accounting choices Accounting Accruals Real activities;
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