Earnings management and initial public offerings: The case of the depository industry
In a typical IPO, insiders are “net sellers” of IPO shares; however, in a demutualizing thrift, insiders are “net buyers” of IPO shares. Using a sample of mutual depository IPOs, we find evidence consistent with earnings management prior to the conversion of mutual thrifts. We find on average that m...
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| Veröffentlicht in: | Journal of banking & finance 2009-12, Vol.33 (12), p.2363-2372 |
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| container_title | Journal of banking & finance |
| container_volume | 33 |
| creator | Adams, Brian Carow, Kenneth A. Perry, Tod |
| description | In a typical IPO, insiders are “net sellers” of IPO shares; however, in a demutualizing thrift, insiders are “net buyers” of IPO shares. Using a sample of mutual depository IPOs, we find evidence consistent with earnings management prior to the conversion of mutual thrifts. We find on average that mutuals report lower ROA and increased loan loss provisions and loan loss reserves in the period prior to the demutualization. Using a two-stage approach, we also find that the level of discretionary loan loss provisions and discretionary reserves are positively related to both the level of insider participation in the IPO and the first-day returns to investors. Our results are consistent with management of mutual thrifts benefiting at the conversion from reduced pre-IPO earnings and book equity resulting from earnings management. |
| doi_str_mv | 10.1016/j.jbankfin.2009.06.015 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0378-4266 |
| ispartof | Journal of banking & finance, 2009-12, Vol.33 (12), p.2363-2372 |
| issn | 0378-4266 1872-6372 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_37209559 |
| source | RePEc; ScienceDirect Journals (5 years ago - present) |
| subjects | Demutualization Earnings Earnings management Earnings management Thrift Mutual Demutualization Initial public offering Loan loss provisions Reserves Financial management Initial public offering Initial public offerings Investors Loan loss allowances Loan loss provisions Loans Loss Mutual Mutual savings institutions Rates of return Reserves Savings & loan associations Strategic planning Studies Thrift |
| title | Earnings management and initial public offerings: The case of the depository industry |
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