| Summary: | 碩士 === 淡江大學 === 會計學系 === 85 === The purpose of this research is to identify any empirical
evidence of the association between new equity
issues of listed firms and earnings manipulation in
Taiwan. Those firms that plan to raise fund for their investment
plans or improvement of their financial position
must comply with the stipulation of the corporate law.
Since profitability is a primary determinant of the evaluation
decision of the underwriters and investors, the management of
the firms contemplating to issue new equity
stocks have strong motives to manipulate their
earnings level, if they want to pass through the review process
of the Security Exchange Commission of Taiwan and
raise their needed fund successfully. At the same time,
this manipulative attempt will also increase their personal
wealth.
Since empirical research for detecting managerial manipulation
of earnings has been concertrated on uncovering evidence
of manipulating accruals since the effort of Healy
(1985), this study will follow the same track by examining
empirical evidence of accrual manipulation a year before the new
equity issues. We believe that the effect of
manipulating accrual a year before their intended
issuing date is the strongest and most effective to
accomplishing their goal. Our result strongly
supports our hypothesis that managerial manipulation of
earnings through accrual exists a year before new equity issues
in Taiwan. The management of these listed firms
increase their discretionary accruals to enhance
their earnings levels. After deleting firms that have new equity
issues that are two years or more apart, the
ststistical result is even more significant.
We also observe that discretionary accruals decrease immediately
after new equity issues. We infer that such decrease is due to
the "write-off" of the discretionary accruals that
were created before the new equity issue.
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