Disclosure frequency and earnings management

Disclosure frequency and earnings management We examine the relation between disclosure frequency and earnings management, and the impact of this relation on post-issue performance, for a sample of seasoned equity offerings (SEOs). We contend that firms with extensive disclosure are less likely to face information problems, leading to less earnings management and better post-issue performance. Our results confirm that disclosure frequency is inversely related to earnings management and positively associated with post-issue performance. We also find that transparency-reducing disclosure is concentrated in firms that substantially, but temporarily, increase disclosure prior to the offering. Such firms exhibit more earnings management and poorer post-SEO stock performance, on average. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Disclosure frequency and earnings management

Journal of Financial Economics, Volume 84 (2) – May 1, 2007

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Publisher
Elsevier
Copyright
Copyright © 2006 Elsevier B.V.
ISSN
0304-405x
D.O.I.
10.1016/j.jfineco.2006.03.007
Publisher site
See Article on Publisher Site

Abstract

We examine the relation between disclosure frequency and earnings management, and the impact of this relation on post-issue performance, for a sample of seasoned equity offerings (SEOs). We contend that firms with extensive disclosure are less likely to face information problems, leading to less earnings management and better post-issue performance. Our results confirm that disclosure frequency is inversely related to earnings management and positively associated with post-issue performance. We also find that transparency-reducing disclosure is concentrated in firms that substantially, but temporarily, increase disclosure prior to the offering. Such firms exhibit more earnings management and poorer post-SEO stock performance, on average.

Journal

Journal of Financial EconomicsElsevier

Published: May 1, 2007

References

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