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What explains the abnormal accruals ...

Cao, Yan.

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What explains the abnormal accruals around equity carve-outs?

Record Type:	Language materials, printed : Monograph/item
Title/Author:	What explains the abnormal accruals around equity carve-outs?/
Author:	Cao, Yan.
Description:	107 p.
Notes:	Adviser: Ross L. Watts.
Contained By:	Dissertation Abstracts International68-08A.
Subject:	Business Administration, Accounting. -
Online resource:	http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=3279133
ISBN:	9780549204794

What explains the abnormal accruals around equity carve-outs?
Cao, Yan.

What explains the abnormal accruals around equity carve-outs? - 107 p.

Adviser: Ross L. Watts.

Thesis (Ph.D.)--University of Rochester, 2007.

Previous research suggests that equity carve-outs are undertaken for a number of reasons, for example, to optimize the subsidiary's corporate policies, to maximize the parent firm's proceeds from selling the subsidiary, or to alleviate the parent's own financial constraints. In this paper I find that, in contrast to the positive abnormal accruals previously documented around regular equity offerings, the average pre-issue abnormal accruals of carved out units are negative and significantly lower than those of peer firms with similar growth and ROA, while in the post-carve-out period the abnormal accruals are more persistent than those of their peers. I also find significant cross-sectional variation in pre-issue abnormal accruals. In particular, pre-issue abnormal accruals tend to increase with the parent's financial distress and the percentage of proceeds remitted to the parent, whereas they are likely to be lower if the subsidiary is subsequently sold to a corporate buyer or if the divisional managers are granted higher equity compensation upon completion of the carve-out, although divisional managers tend to receive less stock option grants and are less likely to act on compensation-driven earnings management incentives if the parent firm is financially distressed. These results are robust to the potential impact of management turnover, the parent firm's financial reporting concerns, the parent's tax reduction incentives, and other confounding issues. Overall, the results of this paper suggest that carve-outs are associated with multiple incentives, and that these various incentives affect accounting choices and accruals behavior differently. Thus, the question of how equity offerings impact discretionary financial reporting is likely oversimplified in existing earnings management studies.

ISBN: 9780549204794Subjects--Topical Terms:

1020666
Business Administration, Accounting.

What explains the abnormal accruals around equity carve-outs?
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100 1 $a Cao, Yan. $3 1265188
245 1 0 $a What explains the abnormal accruals around equity carve-outs?
300 $a 107 p.
500 $a Adviser: Ross L. Watts.
500 $a Source: Dissertation Abstracts International, Volume: 68-08, Section: A, page: 3450.
502 $a Thesis (Ph.D.)--University of Rochester, 2007.
520 $a Previous research suggests that equity carve-outs are undertaken for a number of reasons, for example, to optimize the subsidiary's corporate policies, to maximize the parent firm's proceeds from selling the subsidiary, or to alleviate the parent's own financial constraints. In this paper I find that, in contrast to the positive abnormal accruals previously documented around regular equity offerings, the average pre-issue abnormal accruals of carved out units are negative and significantly lower than those of peer firms with similar growth and ROA, while in the post-carve-out period the abnormal accruals are more persistent than those of their peers. I also find significant cross-sectional variation in pre-issue abnormal accruals. In particular, pre-issue abnormal accruals tend to increase with the parent's financial distress and the percentage of proceeds remitted to the parent, whereas they are likely to be lower if the subsidiary is subsequently sold to a corporate buyer or if the divisional managers are granted higher equity compensation upon completion of the carve-out, although divisional managers tend to receive less stock option grants and are less likely to act on compensation-driven earnings management incentives if the parent firm is financially distressed. These results are robust to the potential impact of management turnover, the parent firm's financial reporting concerns, the parent's tax reduction incentives, and other confounding issues. Overall, the results of this paper suggest that carve-outs are associated with multiple incentives, and that these various incentives affect accounting choices and accruals behavior differently. Thus, the question of how equity offerings impact discretionary financial reporting is likely oversimplified in existing earnings management studies.
590 $a School code: 0188.
650 4 $a Business Administration, Accounting. $3 1020666
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710 2 $a University of Rochester. $3 515736
773 0 $t Dissertation Abstracts International $g 68-08A.
790 $a 0188
790 1 0 $a Watts, Ross L., $e advisor
791 $a Ph.D.
792 $a 2007
856 4 0 $u http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=3279133