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​Prior studies of real-activity earnings management (REM) focus on earnings-inflating abnormal activities. We seek to establish the existence of downward REM by investigating several corporate events in which managers have incentives to temporarily deflate market valuations. Specifically, we...
Persistent link: https://www.econbiz.de/10013017293
the trade-off theory or the pecking-order theory. Our results are consistent with agency theory only through managers …-off or pecking-order theory, as seen in patterns in the relationship between the capital structure and firm performance …, whereas agency theory holds only after external intervention by managers in terms of earnings management. …
Persistent link: https://www.econbiz.de/10012817965
We investigate the interplay between creditor financing and the smoothness of earnings reported by European private firms and document how heterogeneous debt-contracting infrastructures across Europe moderate this relation. Most European private firms are owner-manager run enterprises with...
Persistent link: https://www.econbiz.de/10013032464
The size of the equity risk premium remains an unanswered question in the accounting and finance literature. This study proposes a new approach to reverse-engineer the equity risk premium, distinct from prior research, in that it does not rely on analysts’ forecasts to proxy for the market’s...
Persistent link: https://www.econbiz.de/10014195500
This paper studies the first day return of 227 carve-outs during 1996-2013. I find that the first day return of newly issued subsidiary stocks is explained by the reporting distortions in the pre IPO period, conditioned on whether the executives and directors of the subsidiary received stock...
Persistent link: https://www.econbiz.de/10012970504
The size of the equity risk premium remains an unanswered question in the accounting and finance literature. This study proposes a new approach to reverse-engineer the equity risk premium, distinct from prior research, in that it does not rely on analysts' forecasts to proxy for the market's...
Persistent link: https://www.econbiz.de/10013133582
Using a sample of long-term supply contracts collected from SEC filings, I show that hold-up concerns and information asymmetry are important determinants of contract design. Asymmetric information between buyers and suppliers leads to shorter term contracts. However, when longer duration...
Persistent link: https://www.econbiz.de/10013086012
This study empirically examines the role of risk sharing between taxable investors and the government on the relation between capital gains taxes and expected returns. Specifically, using an international panel from 26 countries over the period 1990 to 2004, we find evidence that the general...
Persistent link: https://www.econbiz.de/10013006684
A number of studies have examined the effect of public and private ownership on the cost of debt and conclude that the cost of debt of privately owned firms is higher, driven mainly by the poorer information environment in which these firms operate. We extend this strand of research in two ways....
Persistent link: https://www.econbiz.de/10012972269
Our study explores how managerial stock holdings and option holdings affect CEOs' income smoothing incentives. Given the different roles of stock holdings and option holdings in solving agency problems, managers may smooth past earnings using discretionary accruals for the purpose of revealing...
Persistent link: https://www.econbiz.de/10012971185