Capital Decrease, Earnings Management, and Long-term Performance
碩士 === 國立高雄大學 === 亞太工商管理學系碩士班 === 96 === Capital Decrease has been popular in Taiwan. However, recent study documents that firms conducting capital decrease experience poor stock price after one year announcement. We examine whether earnings management exists in different forms of capital decrease c...
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| Format: | Others |
| Language: | en_US |
| Published: |
2008
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| Online Access: | http://ndltd.ncl.edu.tw/handle/44402873688942047692 |
| Summary: | 碩士 === 國立高雄大學 === 亞太工商管理學系碩士班 === 96 === Capital Decrease has been popular in Taiwan. However, recent study documents that firms conducting capital decrease experience poor stock price after one year announcement. We examine whether earnings management exists in different forms of capital decrease can explain a portion of the underperformance. We find that earnings management exists after the announcement of capital decrease and the earnings manipulation lasts for a while. Furthermore, we find that the higher the aggressive accruals, the lower the stock performance. Consistent with the existing literatures of earnings management, high discretionary current accruals experience poor long-term performance after capital decrease. The results imply that managers will engage in earnings management by decreasing capital to boost stock prices without improving the firm’s solvency. The stock performance will be punished by the market in the long run.
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