Earnings Management in Polish Companies

Brzeszczyński, Janusz; Gajdka, Jerzy; Schabek, Tomasz

doi:10.2478/v10103-011-0023-1

Cited by 16 publications

(8 citation statements)

References 17 publications

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“…For example, Wójtowicz [72], with a sample covering the first stage of the Polish stock exchange's development up to the crisis (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007), concluded that companies manage earnings to a similar extent to their foreign counterparts. Subsequent research by Brzeszczyński, Gajdka, and Schabek [73] documented the desire of public companies in Poland during 1997-2010 to report positive profits. Czajor, Michalak, Waniak-Michalak [74] investigated whether economic conditions influence earnings quality.…”

Section: Earnings Quality Around Going Public: the Existing Evidencementioning

confidence: 99%

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Lizińska

Czapiewski

2018

Sustainability

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Companies are very important contributors to the long-term sustainable wealth of economies and society. Public companies are likely to be especially important for economic, environmental, and social development. That is why we focus on initial public offerings (IPO). Responsible external reporting relates to the long-term value of companies and influences perceptions of value by stakeholders. This study contributes to the literature not only because it concentrates on earning quality in terms of going public, but it also combines it with another market puzzle, namely, long-term value. Previous conclusions for other markets should not simply be generalized for Poland, as the country has been an emerging market with many public firms controlled by insiders, with a limited role for the equity market and quite considerable bank financing. Using a unique dataset, we find positive and significant discretionary accruals in the IPO year, which may be perceived as a sign of poor earning quality. We also show that these accruals are negatively correlated with subsequent long-term market value for IPOs made before the financial crisis. The general conclusions are robust with respect to the latest innovations in proxies for earnings management, and also to a variety of alternative specifications.

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Section: Earnings Quality Around Going Public: the Existing Evidencementioning

confidence: 99%

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Lizińska

Czapiewski

2018

Sustainability

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“…Previous research focused mainly on earnings management (Callao et al, 2017). Companies operating in Poland have already attracted the attention of researchers (Brzeszczyński et al, 2012;Piosik & Strojek-Filus, 2013), and such managerial activity was also addressed by IPO studies (Lizińska & Czapiewski, 2018;Sosnowski, 2018). Although there is evidence that companies operating in the Czech Republic, Slovakia, Hungary (Siekelova et al, 2020;Valaskova et al, 2021;Durana et al, 2022), and Bulgaria (Krastev et al, 2021) undertake earnings management initiatives, and empirical studies have confirmed the use of upward earnings manipulation (Kliestik et al, 2021), knowledge on earnings quality is still relatively scarce.…”

Section: Introductionmentioning

confidence: 99%

Persistence of pre-IPO earnings of new companies from CEE stock markets

Sosnowski

2022

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Research background: A company?s earnings are one of the main determinants of investment decisions on the stock market. Thus, the reliability of disclosed financial information is crucial for the efficient allocation of capital. Unfortunately, reported earnings are an economic category susceptible to manipulation. This problem grows especially in the case of an initial public offering (IPO), as there is significant information asymmetry. Purpose of the article: The main aim of the paper is to assess the persistence of earnings reported by companies in the IPO process and to empirically identify financial characteristics associated with persistence of earnings. The usefulness of financial information is directly related to the issue of earnings quality. Therefore, this paper contributes to the stream of study on the quality of financial reporting of new stock companies. Methods: I employ a simple single-factor regression model to recognize the earnings persistence in new stock companies. Pre-IPO earnings are the explanatory variable. Then, I use multiple regression analysis to identify factors that influence this metric of reported earnings quality. Findings & value added: Using a sample of companies from stock exchange markets in Central and Eastern Europe (i.e., the Warsaw Stock Exchange, the Bulgarian Stock Exchange, the Bucharest Stock Exchange, the Belgrade Stock Exchange, the Prague Stock Exchange) that went public between 2010 and 2018, I find that, generally, pre-IPO earnings hold higher persistence compared to earnings reported in the year of the IPO. Profitability seems to be a factor that significantly influences this feature. Thus, the results contribute to corporate theory and practice facing insufficient empirical evidence on the issue of sustaining pre-IPO profitability in the long term, additionally putting these concerns in the context of the economic environment of European emerging stock markets.

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“…In Poland, more than sixty models have been developed, mainly focused on manufacturing enterprises using multiple discriminant analysis (Gajdka & Stos, 1996;Mączyńska, 1994;Pogodzinska & Sojak, 1995). Brzeszczyński et al (Brzeszczyński, Gajda, & Schabek, 2012) and Welc (2011) investigated earnings manipulation by Polish companies, and concluded that Polish stock market companies perform manipulation with earnings. As investigated by Callao et al (2017), Poland is a pioneer in developing models of detecting earnings manipulation (with more than ten models) when considering the V4 countries.…”

Section: Methods Of Identifying the Manipulation Of Financial Stateme...mentioning

confidence: 99%

Tax Avoidance, Fraud Detection and Related Accounting Issues. Insights from the Visegrad Group Countries

2021

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Earnings Management in Polish Companies

Cited by 16 publications

References 17 publications

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Persistence of pre-IPO earnings of new companies from CEE stock markets

Tax Avoidance, Fraud Detection and Related Accounting Issues. Insights from the Visegrad Group Countries

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