Journal article
Financing Decisions and Discretionary Accruals: Managerial Manipulation or Managerial Overoptimism
Review of behavioral finance, v 3(2), pp 91-114
01 Jan 2011
Abstract
We examine whether discretionary accruals of firms obtaining substantial external financing can be explained by managerial manipulation or managerial overoptimism. Insider trading patterns and press releases around equity and debt financing suggest that managers are more optimistic about their firms around debt financing. Consistent with earlier studies, we find that discretionary current accruals peak when firms obtain equity financing. However, we also find that discretionary accruals peak when firms obtain debt financing. Moreover, discretionary accruals are higher for firms that rely on debt rather than on equity financing. The results are robust to controlling for firm characteristics, excluding small and distressed firms, and using alternative measures of discretionary accruals. These findings support the hypothesis that managerial overoptimism distorts financial statements of firms obtaining external financing.
Metrics
Details
- Title
- Financing Decisions and Discretionary Accruals: Managerial Manipulation or Managerial Overoptimism
- Creators
- Dalia Marciukaityte - Illinois State UniversitySamuel H. Szewczyk - Drexel University
- Publication Details
- Review of behavioral finance, v 3(2), pp 91-114
- Publisher
- Emerald Group Publishing
- Number of pages
- 24
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000214843700003
- Scopus ID
- 2-s2.0-85014811968
- Other Identifier
- 991019167953004721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance