Earnings Management Surrounding New Debt Issues

Financial Review - Tập 45 Số 3 - Trang 659-681 - 2010
Yixin Liu1, Yixi Ning2, Wallace N. Davidson3
1University of New Hampshire
2University of Houston,
3southern illinois university

Tóm tắt

AbstractWe examine whether firms manage earnings before issuing bonds to achieve a lower cost of borrowing. We find significant income‐increasing earnings management prior to bond offerings. We also find that firms that manage earnings upward issue debt at a lower cost, after controlling for various bond issuer and issue characteristics. Our results are consistent with studies that report earnings management around equity issuance. The results indicate that, like equity holders, bondholders fail to see through the inflated earnings numbers in pricing new debt.

Từ khóa


Tài liệu tham khảo

10.1016/j.jacceco.2004.01.004

Ashbaugh H., 2006, The effects of corporate governance on firms’ credit ratings, Journal of Accounting and Economics, 42, 206

10.1111/j.1911-3846.1998.tb00547.x

10.1086/344114

10.1111/j.1468-5957.1987.tb00544.x

Chi J.D., 2008, Overvaluation and earnings management, Working paper

10.1017/S002210900000212X

10.1016/j.jacceco.2005.08.002

10.1111/j.1540-6288.2007.00161.x

Demirtas O. A.Ghosh K.Rodgers andJ.Sokobin 2006.Initial credit ratings and earnings management.Working paper American University .

10.1016/S0304-405X(03)00182-X

10.1111/1540-6261.00493

10.1016/S0165-4101(99)00008-7

Frieder L.andI.Suk 2006.Trading venue and voluntary earnings disclosure: The NYSE specialist market versus the NASDAQ dealer market.Working paper Purdue University .

10.2308/acch.1999.13.4.365

10.1111/1475-679X.00041

10.1111/j.1755-053X.2005.tb00090.x

10.2308/accr.2008.83.2.377

10.1016/j.jfineco.2006.03.007

10.1111/j.1540-6288.2009.00219.x

10.2307/2491047

10.1017/S0022109000002374

10.1017/S0022109000001940

Kothari S.P. E.Loutskina andN.Valeri 2006.Agency theory of overvalued equity as an explanation for the accrual anomaly.Working paper SSRN.

Li J. L.Zhang andJ.Zhou 2005.Earnings management and delisting risk: The case of IPO firms.Working paper University of Rochester .

Litov L.P. 2005.Corporate governance and financing policy: New evidence.Working paper New York University .

10.1111/j.1540-6261.1995.tb05166.x

Mansi S.A. W.F.Maxwell andD.P.Miller 2005.Information risk and the cost of debt capital.Working paper SSRN.

10.1111/j.0306-686X.2004.00541.x

10.1080/09638180500204624

10.1017/S0022109000002088

Perry S.E., 1994, Earnings management preceding management buyout offerings, Journal of Accounting and Economics, 50, 101

10.1016/S0304-405X(98)00033-6

Schipper K., 1989, Commentary on earnings management, Accounting Horizons, 3, 91

10.1016/S0165-4101(00)00026-4

Sloan R.G., 1996, Do stock prices fully reflect information in cash flows and accruals about future earnings, The Accounting Review, 71, 289

10.1016/0304-405X(94)00817-K

10.1016/S0304-405X(99)00031-8

10.1111/0022-1082.00079

10.1016/S0304-405X(98)00032-4

10.1023/A:1009688619882

Watts R.L., 1978, Towards a positive theory of the determinant of accounting standards, The Accounting Review, 53, 112

10.1016/S0929-1199(02)00006-8

10.1111/j.0306-686X.2005.00631.x

10.1016/0165-4101(81)90010-0

Thông tin
Thông tin xuất bản

Financial Review

Tập 45 Số 3

659-681

Thông tin tác giả