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Equity fund raising and “creative” accounting practices: Indications from Athens Stock Exchange for the 1999-2000 period

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  • Panayiotis Curtis
  • Jonh Thalassinos

Abstract

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.

Suggested Citation

  • Panayiotis Curtis & Jonh Thalassinos, 2005. "Equity fund raising and “creative” accounting practices: Indications from Athens Stock Exchange for the 1999-2000 period," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 127-127.
  • Handle: RePEc:ers:journl:v:viii:y:2005:i:1-2:p:127-
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    File URL: http://www.ersj.eu/repec/ers/papers/05_12_p7.pdf
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    References listed on IDEAS

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    1. 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 -.
    2. 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, September.
    3. 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.
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    Cited by:

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    2. Gheorghe V. Lepadatu & Mironela Pirnau, 2009. "Transparency in Financial Statements (IAS/IFRS)," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 101-108.
    3. Konstantinos J. Liapis, 2010. "The Residual Value Models: A Framework for Business Administration," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 83-102.
    4. Nikolaos G. Theriou & Vassilis Aggelidis & Georgios N. Theriou, 2009. "A Theoretical Framework Contrasting the Resource-Based Perspective and the Knowledge-Based View," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 177-190.
    5. John Thalassinos & Konstantinos Liapis, 2011. "Measuring a Bank’s Financial Health: A Case Study for the Greek Banking Sector," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 135-172.
    6. George Loukopoulos & Theodoros Roupas, 2014. "Financial Analysis of the Greek Private Health Sector over the Last Decade (2002-2012)," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 3-19.
    7. George M. Korres & Stylianos Drakopoulos, 2009. "Economics of Innovation: A Review in Theory and Models," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 25-38.
    8. repec:ers:journl:v:xvi:y:2013:i:sisme:p:79-96 is not listed on IDEAS
    9. Athanasios P. Bellas & Christos Tzovas, 2008. "The Effects of Dependency on Debt Financing On Financial Reporting Policy: The Case of Greece," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 13-30.
    10. Irena Jindrichovska, 2013. "Financial Management in SMEs," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 79-96.
    11. Szilveszter FEKETE & Yau M. DAMAGUM & Razvan MUSTATA & Dumitru MATIS & Ioan POPA, 2010. "Explaining Accounting Policy Choices of SME’s: An Empirical Research on the Evaluation Methods," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 33-48.

    More about this item

    Keywords

    Athens Stock Exchange; Earnings manipulation; Beneish Model; RNOA ratio; Z score;

    JEL classification:

    • G - Financial Economics

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