Reviewing earnings quality at the IPOs: the influence of opportunistic behaviour and ownership control mechanisms
The paper reviews whether IPO firms engage in earnings management discretionary behaviour, by focusing on the accrual-based earnings management (AEM) models. It also determines on the influence of opportunistic behaviour and ownership control mechanisms towards earnings quality of IPO firms. Inde...
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Main Authors: | , |
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Format: | Conference or Workshop Item |
Language: | English |
Published: |
2017
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Subjects: | |
Online Access: | http://eprints.unisza.edu.my/1016/1/FH03-FESP-18-12837.pdf http://eprints.unisza.edu.my/1016/ |
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Summary: | The paper reviews whether IPO firms engage in earnings management discretionary behaviour, by
focusing on the accrual-based earnings management (AEM) models. It also determines on the
influence of opportunistic behaviour and ownership control mechanisms towards earnings quality
of IPO firms. Indeed, earnings management at the time of the IPO is an important issue because it
can lead investors to pay an unreasonable price for their shares. The Jones (Jones, 1991),
Modified Jones, Performance Matched (Kothari et al., 2005), and Total Accrual Models (Dechow
et al., 1995; Jones, 1991; Kothari et al., 2005) will be used to investigate accrual activity
behaviours in IPO firms. The quality of financial reporting in IPO firms is expected to be enhanced
by limiting the opportunistic managerial discretion and ownership control mechanisms. The
earnings management practices although brings strong debate among scholars and practitioners
(including regulators), it is an unethical but still permissible and legal also acceptable for
accounting alternatives by the leniency of GAAP framework (Burns & Merchant, 1990;
MacIntosh, 1995; Grasso, Tilley and White, 2009). While for the IFRS, there is no evidence has
been found that earnings management has become lower by adopting the IFRS and it even rising
in France. |
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