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

Lizińska, Joanna; Czapiewski, Leszek

doi:10.3390/su10124349

Cited by 29 publications

(42 citation statements)

References 90 publications

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“…Their findings show that aggressive managers experience 20 percent lower stock returns than conservative managers. Recently, Lizińska and Czapiewski [9] found similar results, showing that positive and significant discretionary accruals in the IPO year are negatively correlated with subsequent long-term market value. Rangan [10] used seasoned equity offerings and examines earnings management around offerings.…”

Section: Prior Research On Sustainable Earningsmentioning

confidence: 60%

Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea

Lee

2019

Sustainability

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The harmonization of accounting standards has been an international trend in the past two decades. As of 2018, 144 of 166 profiled jurisdictions require the use of International Financial Reporting Standards (IFRS). Nevertheless, there is mixed evidence on the effect of IFRS on sustainable accounting information. This study examines whether IFRS adoption improves earnings sustainability, focusing on emerging markets. Specifically, it tests the effect of IFRS on earnings quality by comparing earnings management and financial statement comparability of Korean listed firms for the pre- and post-IFRS periods. The results show that firms report less managed earnings in the post-IFRS period than in the pre-IFRS period. Furthermore, the results suggest the enhancement of financial statement comparability in the post-IFRS period compared to the pre-IFRS period. In particular, this paper documents that the effect of IFRS on sustainable accounting information is more pronounced in competitive industries. Moreover, it shows that small firms benefit more from adopting IFRS. Overall, this study finds that IFRS adoption in Korea improves the overall sustainability of accounting information.

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Section: Prior Research On Sustainable Earningsmentioning

confidence: 60%

Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea

Lee

2019

Sustainability

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“…Public companies can be especially important contributors to the long-term sustainable wealth of economies and society [30]. This study examined the characteristics of companies ahead of delisting in the KOSDAQ market and in conservative accounting.…”

Section: Discussionmentioning

confidence: 99%

Company’s Sustainability and Accounting Conservatism: Firms Delisting from KOSDAQ

2019

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This paper finds evidence that delisting firms make reported earnings more conservative to avoid litigation risk. Conservatism has been used as one of suitable reporting quality measurements that is separate from discretionary accruals, in that investors can monitor the firm’s contract efficiency or litigation risk by demanding conservatism. We collect a sample that is composed of 6348 listed non-financial companies for the period 2009–2016. Our results are as follows. First, we find that companies ahead of delisting are more conservative than other companies in Korean Securities Dealers Automated Quotations (KOSDAQ). Second, companies that are ahead of delisting whose auditor is non-big4 are significantly more conservative. Our results imply that companies that are in the process of delisting are seeking to increase their sustainability and to improve earnings quality, such as conservatism, and that small auditors are more conservative in order to mitigate the higher risk of litigation in comparison with big4 auditors. This study has a role to complement prior studies regarding delisting, and provides that the delisting institutions in KOSDAQ market can improve the efficiency and the reliability of the capital market.

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“…This includes upward earnings management. In this context, existing research has shown that companies about to be listed tend to use information asymmetry by engaging in upward earnings management [11,13,[19][20][21][22][23]. Therefore, investors believe that any other information they can secure before making investment decisions only based on public financial information acts as an incentive for them to reflect on their own decisions [3,24,25].…”

Section: Prior Literature and Hypothesis Developmentmentioning

confidence: 99%

“…Therefore, it can be said that underwriters participating in new listing processes control the upward earnings management and inadequate or inappropriate disclosure of newly listed companies [5,13,23,[42][43][44]. In this respect, it is believed that underwriters play an important role in helping both newly listed companies and related stakeholders through decreasing the information asymmetry between them.…”

Section: Prior Literature and Hypothesis Developmentmentioning

confidence: 99%

“…The factors that impact underwriters' reputations include how effectively they complete new listing processes, whether firms arrange listings successfully, whether listings fail due to problems in listing processes, and whether the information is listed on the market as required. Furthermore, underwriters' reputations can affect the performance of newly listed companies and their abilities to conduct long-term operating activities in the market as follows: Underwriters with excellent reputations will increase the future viability of the companies that employ them [3][4][5][6][7][8][9][10][11][12][13]. In this regard, prior studies are limited to how the reputations of underwriters affect the financial reporting and performance of newly listed firms.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Do Reputable Underwriters Affect the Sustainability of Newly Listed Firms? Evidence from South Korea

Na-Youn

2019

Sustainability

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This study empirically examined whether underwriters’ reputations affect the sustainability of newly listed firms, focusing on firm delisting risk using survival analysis. It was hypothesized that newly listed firms with more reputable underwriters would prove more sustainable, and this hypothesis was tested using a sample of firms that were newly listed on the Korea Composite Stock Price Index (KOSPI) and the Korea Securities Dealers Association Automated Quotation (KOSDAQ) markets in South Korea between 2001 and 2012. The data collected and used to test the aforementioned hypothesis were from 2001 to 2017. The analysis showed that newly listed firms with more reputable underwriters have lower delisting risk. This implies that newly listed firms with more reputable underwriters enjoy greater sustainability. This study meaningfully contributes to sustainability research by rationally explaining why underwriters’ incentives to maintain their reputations improve newly listed firms’ business and financial status. This study differs from other management studies in that it produced meaningful results using survival analysis, which has not been widely used in conventional management studies. Its findings also contribute in terms of identifying the possibility that underwriters’ reputations can be used as a predictor of the possibility of delisting newly listed companies.

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

Cited by 29 publications

References 90 publications

Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea

Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea

Company’s Sustainability and Accounting Conservatism: Firms Delisting from KOSDAQ

Do Reputable Underwriters Affect the Sustainability of Newly Listed Firms? Evidence from South Korea

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