A Study on the Influence of Earnings Management Behavior towards SEO’s Discount and Stock Price Performance

• Main Authors: Ju-Mei Chang, 張珠美
• Other Authors: Chun-An Li
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/22138462502208008996

碩士 === 雲林科技大學 === 財務金融系碩士班 === 96 === In order to achieve the company’s economical objective or increase self-wealth, the management of a listed company would raise capital from the capital market using seasonal equity offerings (SEO). For successfully raising necessary capital from the market, the company’s manager might have the motivation of engage in earnings management in order to conceal the company’s real value. This study using the domestic listed companies that carried out SEO from 1998 to 2006 as the samples, and discretionary accruals are used as the main explanatory variables for earnings management. Because of the difference of earnings management levels, the study samples are differentiated into positive discretionary accruals and negative discretionary accruals that indicate exaggerated and conservative earnings management behaviors respectively. And then, the influence of earnings management behavior towards the long- and short-term stock price performance after SEO is discussed, so as to help the investors to make investment decision making. The empirical result shows that, in the sub-samples of negative discretionary accruals, there is significant negative relationship between discretionary accruals and short-term stock price performance (7 days, 14 days), which indicates that under the conservative earnings management behavior from SEO company, the negative discretionary accruals expand the short-term stock price performance (7 days, 14 days). In the sub-samples of positive discretionary accruals, there is significant negative relationship between discretionary accruals and discount range, which indicates that SEO company is engaging in exaggerated and fraudulent earnings management behavior; in other words, the higher the discretionary accruals, the smaller discount range will be. When combining the sub-samples of positive and negative discretionary accruals together, there is significant negative relationship between discretionary accruals and short-term stock price performance (30 days), which indicates that the conservative earnings management behavior from SEO companies expands the short-term stock price performance (30 days). Last but not least, the influence of earnings management behavior towards the long-term stock price performance of the SEO companies after SEO is discussed, the positive discretionary accruals show significant positive relationship towards the remuneration of the 2 years and 3 years holding periods; with regard to long-term period, the exaggerated earnings management behavior of the SEO company would have significant influence towards the company’s following stock price performance.