Earnings Management and the Post-Issue Underperformance of Global Depositary Receipt Offerings
|關鍵字:||存託憑證;盈餘管理;長期績效;Depositary Receipts ;Earnings Management;Long-Term Perprmance|
A procedure is Issuers of depositary receipts offerings (DRs) can report earnings in excess of cash flows by taking positive accruals. Therefore, I investigate whether earnings management around the time of the offering can explain a portion of the post-issue underperformance. This study provides evidences that firms issuing DR with unusually high net income and accruals in the DR issuing year experience poor stock return performance in one, three, and five years thereafter. DR issuers in aggressive group of earnings management have poorer long-run performance than the conservative group. These findings suggest that the investors temporarily overvalue issuing firms and are subsequently disappointed by unsustainable high earnings.