Psychologists have studied human behavior for over a century and, as a result, have developed a robust set of theories regarding how people behave. Most financial accounting issues deal with matters of human behavior, such as the judgments and decisions of managers, investors, analysts, and...

We examine earnings management behavior around SEOs, focusing on both real activities and accrual-based manipulation. Although research has addressed the issues of earnings management around SEOs and earnings management via real activities manipulation, ours is the first paper to put these two...

This paper investigates whether some initial public offering (IPO) managers report informative (as opposed to opportunistic) income-increasing accruals and the extent to which market participants differentially price informative accruals. I find significantly more persistent income-increasing...

The poor stock price performance of firms conducting initial public offerings is one of the recent puzzles in financial literature. We detect this market anomaly for Spanish IPO firms and we investigate whether earnings management around the time of the offering can explain these results....

Prior studies suggest that VCs play a monitoring role. We predict and find that IPO-year abnormal accruals are lower in the presence of VCs for a sample of 2630 IPO firms during 1983-2001. Our findings are robust to controls for the endogenous choice of VC financing. We consistently find that...

This study examines the relationship between earnings management by firms offering seasoned equity issues and the pricing of their offers. We hypothesize that seasoned equity offering (SEO) firms employing aggressive accounting decisions also more aggressively push up their offer prices, thereby...

This paper investigates whether and how the initiation of Credit Default Swaps (CDS) trading affects analyst optimism. First, we document that analyst forecasts become less optimistic after the initiation of CDS trading. Second, we find that the dampening effect of CDS on analyst optimism is...

Flotation costs represent a significant loss of capital to firms and are positively related to information asymmetry between managers and outside investors. We measure a firm's information asymmetry by its accounting information quality based on two extensions of the Dechow and Dichev earnings...

The paper assesses the value of the information contained in management's determination of the accounting treatment for software development costs. The assessment is made in the context of the initial public offerings (IPO) market and is based on the effect of the accounting treatment on...

We document that the quality of public and private information available to investors improves before seasoned equity offerings (SEO) but deteriorates shortly thereafter. As firms improve their financial communication, analyst earnings forecasts become more accurate and less biased. However,...