Using Actual Stock Repurchase as an EPS Management Devices
碩士 === 朝陽科技大學 === 會計所 === 95 === The studies of Brav, et al. (2003) and Badrinath & Varaiya (2001) indicate that the most frequently mentioned reason to repurchase stock is “improving EPS numbers”. Given the popularity of stock repurchases in the open market after year 2000 in Taiwan and the im...
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| Format: | Others |
| Language: | zh-TW |
| Published: |
2007
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| Online Access: | http://ndltd.ncl.edu.tw/handle/71044751070101062791 |
| Summary: | 碩士 === 朝陽科技大學 === 會計所 === 95 === The studies of Brav, et al. (2003) and Badrinath & Varaiya (2001) indicate that the most frequently mentioned reason to repurchase stock is “improving EPS numbers”. Given the popularity of stock repurchases in the open market after year 2000 in Taiwan and the implication that repurchases can be used to boost firm’s reported EPS, it is relative little academic attention has been devoted to examine the use of stock repurchases as an earnings management device. One unique feature of stock repurchases regulation in Taiwan is the listed firms are required to file a formal execution report following the expiration date. Owing to this distinctive stipulation, the present study has detailed authorized versus actual repurchase data to observe both the incremental new issues and the deviation of current EPS from prior year’s reported EPS associated with stock repurchase programs execution. Thus, the present study uses concurrent EPS approach the benchmark which proxied by the preceding EPS and zero-EPS to examine whether the firms repurchase stock as a managerial device to improve EPS.
The empirical results suggest that firms use stock repurchases to decrease outstanding stock in order to increase EPS when the firm’s unmanaged EPS approaches preceding actual EPS or exceeds EPS at zero. The firms that have higher proportion of stock dividend and employee stock bonus to outstanding stocks the larger stock repurchases which suggests repurchase firms through stock repurchases to decrease outstanding stocks then avoid the firms’ EPS being over-diluted.
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