Faculty Digital Archive

Archive@NYU >
Stern School of Business >
Accounting Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27595

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.: Paul Zarowin-06
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/2451/27595
Appears in Collections:Accounting Working Papers

Files in This Item:

File Description SizeFormat
SSRN-id1081939.pdf308.5 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.

 

The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS