Essays on Earnings Management (summary section only)

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Title: Essays on Earnings Management (summary section only)
Author: Spohr, Jonas
Contributor: Hanken School of Economics, Department of Accounting and Commercial Law, Accounting
Thesis level: Doctoral thesis
Belongs to series: Economics and Society - 153
ISBN: 951-555-898-0
Abstract: There is much literature developing theories when and where earnings management occurs. Among the several possible motives driving earnings management behaviour in firms, this thesis focuses on motives that aim to influence the valuation of the firm. Earnings management that makes the firm look better than it really is may result in disappointment for the single investor and potentially leads to a welfare loss in society when the resource allocation is distorted. A more specific knowledge of the occurrence of earnings management supposedly increases the awareness of the investor and thus leads to better investments and increased welfare. This thesis contributes to the literature by increasing the knowledge as to where and when earnings management is likely to occur. More specifically, essay 1 adds to existing research connecting earnings management to IPOs and increases the knowledge in arguing that the tendency to manage earnings differs between the IPOs. Evidence is found that entrepreneur owned IPOs are more likely to be earnings managers than the institutionally owned ones. Essay 2 considers the reliability of quarterly earnings reports that precedes insider selling binges. The essay contributes by suggesting that earnings management is likely to occur before high insider selling. Essay 3 examines the widely studied phenomenon of income smoothing and investigates if income smoothing can be explained with proxies for information asymmetry. The essay argues that smoothing is more pervasive in private and smaller firms.
Date: 2005-12-07
Subject: earnings management
initial public offerings
insider trading
income smoothing
information asymmetry
discretionary accruals
Rights: This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.

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