Information uncertainty, earnings management, and long-run stock performance following initial public offerings

Sheng Syan Chen, Wen Chun Lin, Shao Chi Chang, Chih Yen Lin

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)

Abstract

We examine how information uncertainty surrounding IPO (initial public offering) firms influences earnings management and long-run stock performance. For low-information-uncertainty issuers, at-issue earnings' management is positively related to subsequent unmanaged earnings and has no relationship to market reaction to earnings announcement and long-run stock performance following the offering. For high-information-uncertainty issuers, however, at-issue earnings' management is unrelated to subsequent unmanaged earnings and negatively related to market reaction to earnings announcement and long-run stock performance following the offer. The evidence suggests that, on average, managers in low-information-uncertainty firms tend to engage in earnings' management for informative purposes, while managers in high-information-uncertainty firms engage in earnings' management for opportunistic purposes.

Original languageEnglish
Pages (from-to)1126-1154
Number of pages29
JournalJournal of Business Finance and Accounting
Volume40
Issue number9-10
DOIs
Publication statusPublished - 2013 Nov 1

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance

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