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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27554
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| Title: | Accrual-Based and Real Earnings Management Activities Around Seasoned
Equity Offerings |
| Authors: | Cohen, Daniel A.
Zarowin, Paul |
| Issue Date: | Jan-2008 |
| Series/Report no.: | Daniel A. Cohen-09 |
| Abstract: | We examine earnings management behavior around SEOs, focusing on both
real activities and accrual-based manipulation, and how this behavior
varies over time and cross-sectionally. Although research has addressed
the issues of earnings management around SEOs and earnings management
via real activities manipulation, ours is the first paper to put these
two issues together. We make three contributions to the literature.
First, we document that firms use real, as well as accrual-based,
earnings management tools around SEOs. Second, consistent with the
expectation that the Sarbanes-Oxley Act (SOX) has made accrual-based
earnings management more costly, we find that firms have substituted
from accrual to real earnings management after SOX. Finally, we show how
the tendency for firms to tradeoff real versus accrual-based earnings
management activities around SEOs varies cross-sectionally. We find that
firms’ choices vary predictably as a function of the firm’s
ability to use accrual management and the costs of doing so. Our model
is a first step in examining how firms tradeoff between real versus
accrual methods of earnings management. |
| URI: | http://hdl.handle.net/2451/27554 |
| Appears in Collections: | Accounting Working Papers
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