"Using a comprehensive linked employer-employee database from Brazil for the period 1995-2001, we are able for the first time to compare firms founded as employee spinoffs to new firms without parents and to diversification ventures of existing firms entering a new industry. Employee spinoffs...

This study examines earnings quality in carve-out financial statements prepared in spinoffs. Using accruals, I provide evidence that carve-out earnings in spinoffs are of low quality relative to the earnings of control groups. Next, I find higher quality carve-out accruals among spinoffs of...