Journal article
Earnings Management and Stock Performance of Reverse Leveraged Buyouts
Journal of financial and quantitative analysis, v 41(2), pp 407-438
Jun 2006
Abstract
This study provides further evidence of earnings management around security offerings. We find positive and significant discretionary current accruals coincident with offerings of reverse LBOs. Issuers in the most aggressive quartile of earnings management have a one-year aftermarket return that is between 15% and 25% less than the most conservative quartile. We also find a negative and significant relation between abnormal accruals and post-issue abnormal returns within the first year after the offering. The relation remains after controlling for book-to-market ratio, firm size, offering size, and involvement of buyout specialists or management. Although earnings management has been used to explain post-issue long-term underperformance of IPOs and SEOs, our study shows that earnings management can explain post-offering returns of reverse LBOs, even in the absence of post-offering underperformance.
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Details
- Title
- Earnings Management and Stock Performance of Reverse Leveraged Buyouts
- Creators
- De-Wai Chou - Yuan Ze UniversityMichael Gombola - Drexel UniversityFeng-Ying Liu - Drexel University
- Publication Details
- Journal of financial and quantitative analysis, v 41(2), pp 407-438
- Publisher
- Cambridge University Press
- Number of pages
- 32
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- [Retired Faculty]
- Web of Science ID
- WOS:000237912800008
- Scopus ID
- 2-s2.0-33745322561
- Other Identifier
- 991019168236404721
InCites Highlights
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics