The economic profitability of pre-IPO earnings management and IPO underperformance

被引：1

作者：

Xiong Y. ^{[1
]}

Zhou H. ^{[2
]}

Varshney S. ^{[1
]}

机构：

[1] College of Business Administration, California State University-Sacramento, Sacramento, CA 95819

[2] Department of Accounting and Business Law, College of Business Administration, The University of Texas-Pan American, Edinburg

来源：

Journal of Economics and Finance | 2010年 / 34卷 / 3期

关键词：

Earnings Management; Initial Public Offering; Market Performance; Underperformance; Zero-Investment Strategy;

D O I：

10.1007/s12197-008-9056-0

中图分类号：

学科分类号：

摘要：

The purpose of this paper is to test the market performance of a zero-investment trading strategy based on the knowledge of IPO underperformance and estimates of pre-IPO earnings management. This trading strategy is implemented by forming two-firm portfolios that take short positions in the IPOs and long positions in control firms matched by industry and market capitalization. The first test shows that significant positive abnormal returns can be earned trading on the knowledge of IPO underperformance. However, the relationship between the level of abnormal returns and the level of pre-IPO earnings management is not found to be significant. Overall, our results suggest that existent pre-IPO earnings management plays important roles although investors may not sophisticated enough to measure the level of earnings management. © 2008 Springer Science+Business Media, LLC.

引用

页码：229 / 256

页数：27

共 31 条

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