IDEAS home Printed from https://ideas.repec.org/p/osk/wpaper/1212.html
   My bibliography  Save this paper

Earnings Management and Stock Price Behavior around IPOs

Author

Listed:
  • Tatsushi Yamamoto

    (Graduate School of Economics, Osaka University)

  • Hideaki Kato

    (Graduate School of Economics, Nagoya University)

Abstract

Under the Financial Instruments and Exchange Act, the managers of an IPO firm are not allowed to sell their own shares for a certain time period after the IPO, which is well known as the lockup period. We examine whether the first fiscal year end of an IPO firm lies before the expiration date of the lockup period affects the earnings management decision and therefore stock market reactions. Our main results are as follows. For IPO firms whose fiscal ends lie within the lockup period, the discretionary accruals are negatively correlated with the firm age and the size of the auditing firms. However such relations are not observed for other IPO firms. Though the stock markets are temporarily misled by the information about discretionary accruals, it is not permanent. Higher managerial ownership after the IPO is favorably priced in the markets.

Suggested Citation

  • Tatsushi Yamamoto & Hideaki Kato, 2012. "Earnings Management and Stock Price Behavior around IPOs," Discussion Papers in Economics and Business 12-12, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1212
    as

    Download full text from publisher

    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1212.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    initial public offering; earnings management; discretionary accruals; Financial Instruments and Exchange Act;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osk:wpaper:1212. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The Economic Society of Osaka University (email available below). General contact details of provider: https://edirc.repec.org/data/feosujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.