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The Effect of the Need for Subsequent Equity Financing on Earnings Management Around Equity Financing

出版	SSRN, 2008
URL	http://books.google.com.hk/books?id=isLizwEACAAJ&hl=&source=gbs_api

註釋This study examines the relation between earnings management activities of firms issuing equity and the level of their subsequent equity issuance in the immediate future. We hypothesize that equity issuers with less need for subsequent equity issuances are more likely to engage in "income-increasing" earnings management prior to their equity issuances. In contrast, equity issuers with more need for subsequent equity issuances would be more concerned about the potential implications of current earnings management on their future reported earnings. We examine the levels of earnings accruals around equity issuances by listed U.S. companies during the period 1984-2001. We find that the level of income-increasing abnormal accruals around current equity issuance is negatively related to their need for subsequent equity issuance. Our results show that as the need for subsequent equity issuance decreases (increases), the level of current income-increasing accruals increases (decreases.).