Earnings management at the time of the IPO is an important issue because it can lead investors to pay an unreasonable price for their shares. The paper reviews whether IPO firms engage in earnings management discretionary behaviour, by focusing on the accrual-based earnings management (AEM) models. It also determines on the influence of opportunistic behaviour and ownership control mechanisms towards earnings quality of IPO firms. The Jones, Modified Jones, Performance Matched, and Total Accrual Models wiil be used to investigate accrual activity behaviours in IPO firms. The quality of financial reporting in IPO firms is expected to be enhanced by limiting the opportunistic managerial discretion and ownership control mechanisms.
Albano, J. M. (2011). Assessment of the Initial Public Offering. NTRC Tax Research Journal, 1-20.
Ahmad-Zaluki, N. A., Campbell, K., & Goodacre, A. (2011). Earnings management in Malaysian IPOs: The East Asian crisis, ownership control, and post-IPO performance. International Journal of Accounting, 46, 111-137. http://dx.doi.org/10.1016/j.intacc.2011.04.001
Bajo, E. C. (2014). Underwriter Networks in Initial Public Offerings. 1-54.
Ballwieser, W. (2009): IFRS-Rechnungslegung, München.
Barth, M., Landsman, W., Lang, M. (2008). International accounting standards and accounting quality. Journal Accounting Research, 46(3), 467–498. doi: 10.1111/j.1475-679X.2008.00287.x
Beidleman, C. R. (1973). Income smoothing: The role of management. The Accounting Review, 48(4), 653-667.
Burgstahler, D., Dichev, I. (1997). Earnings management to avoid earnings decrease and losses. Journal of accounting and economics, 24(1), 99-126. https://doi.org/10.1016/S0165-4101(97)00017-7
Burns, W. & Merchant, K. (1990). The dangerous morality of managing earnings. Management Accounting, 72(2), 22-25.
Chen, H., Tang, Q., Jiang, Y., & Lin, Z. (2010). The role of international financial reporting standards in accounting quality: Evidence from the European Union. Journal of International Financial Management & Accounting, 21(3), 220-278.
Collins, D. W., & Hribar, P. (2000). Earnings-based and accrual-based market anomalies: one effect or two?. Journal of Accounting and Economics, 29(1), 101-123.
Davidson, R., C. Stickney, and Weil. R. (1987). ‘The language of business’, Seventh edition.
DeAngelo, L. E. (1986). Accounting numbers as market valuation substitutes: A study of management buyouts of public stockholders. Accounting review, 400-420.
Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research, 13(1), 1-36,
Dechow, P. M., Sloan, R. G., & Sweeney, A. P. ( 1995). Detecting earnings management. Accounting review, 70, 193-225.
Desai, M. A., Foley, C. F., & Hines, J. R. (2004). A multinational perspective on capital structure choice and internal capital markets. The Journal of Finance, 59(6), 2451-2487.
Doukakis, L. C. (2010). The persistence of earnings and earnings components after the adoption of IFRS. Managerial Finance, 36(11), 969-980.http://dx.doi.org/10.1108/03074351011081286
Ghazali, A. W., Shafie, N. A., & Sanusi, Z. M. (2015). Earnings Management: An Analysis of Opportunistic Behaviour, Monitoring Mechanism and Financial Distress. Procedia Economics and Finance, 28, 190-201.
Givoly, D., Hayn, C. K., & Katz, S. P. (2010). Does Public Ownership of Equity Improve Earnings Quality?. The Accounting Review, 85(1), 195-225.
Grasso, L. P., Tilley, P. A., & White, R. A. (2009). The ethics of earnings management: Perceptions after Sarbanes-Oxley. Management Accounting Quarterly, 11(1).
Guay, W. R., Kothari, S. P., & Watts, D. L. (1996). A market-based evaluation of discretionary accruals models. Journal of accounting research, 83-105.
Gul, F. A., & Tsui, J. S. (2001). Free cash flow, debt monitoring, and audit pricing: Further evidence on the role of director equity ownership. Auditing: A Journal of Practice & Theory, 20(2), 71-84.
Healy, P.M. (1985). The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics 7, 85-107.
Jeanjean, T., & Stolowy, H. (2008). Do accounting standards matter? An exploratory analysis of earnings management before and after IFRS adoption. Journal of accounting and public policy, 27(6), 480-494. http://dx.doi.org/10.1016/j.jaccpubpol.2008.09.008
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329.
Jensen, M.C. (2000). A Theory of the Firm: Governance, Residual Claims, and Organizational Forms. Harvard University Press, Cambridge.
Jensen, M. C., & Meckling,
In-Text Citation: (Sulong, TMR, Ariffin, & Ghani, 2018)
To Cite this Article: Sulong, Z., TMR, S. N. F., Ariffin, M. R., & Ghani, H. A. (2018). Earnings Quality at the IPOS: The Influence of Opportunistic Behaviour and Ownership Control Mechanisms. International Journal of Academic Research in Business and Social Sciences, 8(12), 1265–1277.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
