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Earnings management around IPO lockup expiration and the role of auditors

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Date Issued:
2013
Summary:
I examine the presence of earnings management at pre-IPO and lockup periods. Motivated by significant post-lockup insider sales documented in prior research, I investigate whether insiders (managers and venture capitalists) inflate earnings around the lockup period in order to increase share price and maximize personal wealth from selling shares at lockup expiration. I also compare levels of earnings management in the pre-IPO and lockup periods with those in the post-lockup period. Prior research also documents that auditor quality mitigates earnings management behavior. I explore the impact of auditor quality in the unique setting of IPO lockups. ... Cross-sectional analysis reveals that my sample IPO firms also utilize real-activities manipulation, but only in the early pre-IPO period. The results are robust with respect to alternative abnormal accruals and real-activities measures. I also find that IPO firms that hire prestigious auditors experience less earnings management in the lockup period than firms with lower-quality auditors, after controlling for the monitoring role of venture capitalist and underwriter reputation.
Title: Earnings management around IPO lockup expiration and the role of auditors.
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Name(s): Hao, Lizhong.
College of Business
School of Accounting
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Issued: 2013
Publisher: Florida Atlantic University
Physical Form: electronic
Extent: xi, 114 p. : ill. (some col.)
Language(s): English
Summary: I examine the presence of earnings management at pre-IPO and lockup periods. Motivated by significant post-lockup insider sales documented in prior research, I investigate whether insiders (managers and venture capitalists) inflate earnings around the lockup period in order to increase share price and maximize personal wealth from selling shares at lockup expiration. I also compare levels of earnings management in the pre-IPO and lockup periods with those in the post-lockup period. Prior research also documents that auditor quality mitigates earnings management behavior. I explore the impact of auditor quality in the unique setting of IPO lockups. ... Cross-sectional analysis reveals that my sample IPO firms also utilize real-activities manipulation, but only in the early pre-IPO period. The results are robust with respect to alternative abnormal accruals and real-activities measures. I also find that IPO firms that hire prestigious auditors experience less earnings management in the lockup period than firms with lower-quality auditors, after controlling for the monitoring role of venture capitalist and underwriter reputation.
Identifier: 859865086 (oclc), 3362378 (digitool), FADT3362378 (IID), fau:4184 (fedora)
Note(s): by Lizhong Hao.
Thesis (Ph.D.)--Florida Atlantic University, 2013.
Includes bibliography.
Mode of access: World Wide Web.
System requirements: Adobe Reader.
Subject(s): Going public (Securities)
Business forecasting
Organizational effectiveness
Investment analysis
Portfolio management
Persistent Link to This Record: http://purl.flvc.org/fcla/dt/3362378
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU