Earning Management and the Long-run Performance of Initial Public Offering Firms
Jong-Ryong Lee
This paper examines effect of earning discretion on long-run performance of initial public offering (IPO) stocks. Firms issuing the stocks have been known well to be under-performed in after-market 3 years. The causes of the under-performance still been questionable. One of the plausible solutions was supposed that the firms tempt investors by taking positive accruals and investors overreact the temptations. This paper provides evidence that stocks with unusually high accruals in the IPO year are less performed than those with low accruals in the three years thereafter when the return nets of some stocks listed in KOSDAQ are positive.
Intial Public Offering Firms (IPO),Long-run Performance,Accruals,Discretionary Current Accruals,Accrual Accounting
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