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Accrual Quality and Opportunistic Seasoned Equity Offering in the Korean Stock Market

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  • Kyung Soon Kim
  • Jin Hwon Lee
  • Chune Young Chung

Abstract

We examine accrual quality (AQ) and its relationship with opportunistic seasoned equity offering (SEO) in the emerging Korean stock market. According to our empirical results, SEO firms with lower AQ tend to show higher abnormal returns around SEO announcement and significantly lower long-term performance after SEO. These results are more evident for SEO firms in which influence of institutional investors is weak. These findings suggest that poor AQ may be an important predictor of incentive for opportunistic SEOs and that the incentive may strengthen when institutional investors’ monitoring role weakens.

Suggested Citation

  • Kyung Soon Kim & Jin Hwon Lee & Chune Young Chung, 2015. "Accrual Quality and Opportunistic Seasoned Equity Offering in the Korean Stock Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(S3), pages 140-157, May.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:s3:p:140-157
    DOI: 10.1080/1540496X.2015.1026732
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    Cited by:

    1. Chang Liu & Chune Young Chung & Hong Kee Sul & Kainan Wang, 2018. "Does hometown advantage matter? The case of institutional blockholder monitoring on earnings management in Korea," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 196-221, February.
    2. Kant, Chander, 2018. "Financial openness & institutions in developing countries," Research in International Business and Finance, Elsevier, vol. 46(C), pages 240-250.
    3. Khalid Latif & Arshad Ali Bhatti & Abdul Raheman, 2017. "Earnings Quality: A Missing Link between Corporate Governance and Firm Value," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(2), pages 255-280, June.

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