Equity fund raising and “creative” accounting practices: Indications from Athens Stock Exchange for the 1999-2000 period
Management sometimes exploits the quest of shareholders for higher return on equity capital, by taking advantage of accounting rules gaps or violating them. The Beneish earnings detection manipulation model, is an attempt to reveal such illegal or at least unethical practices. Evidence regarding the use of “creative” accounting practices, based on that model, during the massive equity fund raising in Athens Stock Exchange for the period 1999-2000, are examined. The results of Beneish model are further invigorated towards that aim, when it is accompanied by the Return on Equity (ROE) decomposition ratios and Altman’s Z score of bankruptcy prediction. The model contributes to more efficient allocation of scarce resources.
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- Beneish, Messod D., 1997. "Detecting GAAP violation: implications for assessing earnings management among firms with extreme financial performance," Journal of Accounting and Public Policy, Elsevier, vol. 16(3), pages 271-309.
- Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, 09.
- Panayiotis Courtis, 2003. "DU PONT Ratio: A comprehensive measure of business performance," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 21-34, January -.
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