Pricing of seasoned equity offers and earnings management

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This study examines the relations between earnings management by firms offering seasoned equity issues and the pricing of their offers. We hypothesize that seasoned equity offering (SEO) firms that employ aggressive accounting decisions also more aggressively push up their offer prices, thereby leading to a decrease in the degree of underpricing. Consistent with our prediction (the issuer's greed hypothesis), evidence indicates that SEO firms that make opportunistic accounting decisions issue new shares at inflated prices. Our findings remain robust after controlling for other determinants of SEO underpricing and the possible endogeneity of pricing and earnings management.
Publisher
UNIV WASHINGTON SCH BUSINESS ADMINISTRATION
Issue Date
2005-06
Language
English
Article Type
Article
Keywords

INITIAL PUBLIC OFFERINGS; ISSUES; PERFORMANCE; THRESHOLDS; ACCRUALS; ERRORS; RIGHTS; MONEY

Citation

JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS, v.40, no.2, pp.435 - 463

ISSN
0022-1090
DOI
10.1017/S0022109000002374
URI
http://hdl.handle.net/10203/244396
Appears in Collection
MT-Journal Papers(저널논문)
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