Earnings Management, Buyout Group Reputation and Post-offering Long-Run Stock Performance of Reverse LBOs

Earnings Management, Buyout Group Reputation and Post-offering Long-Run Stock Performance of Reverse LBOs

This paper examines earnings management of private equity-backed IPOs around security offerings in a comprehensive sample of Reverse LBOs between 1981 and 2006. These RLBO companies are found to have positive level of discretionary current accruals (DCAs) at a much smaller magnitude compared to othe...

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Bibliographic Details
Main Author: ZHOU, Teng Yinzi
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2010
Subjects:
reverse leveraged buyouts
earnings management
buyout group reputation
financial performance
Going public (Securities)
Corporate Finance
Finance and Financial Management
Online Access:https://ink.library.smu.edu.sg/etd_coll/237
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Institution: Singapore Management University
Language: English
Description
Summary:This paper examines earnings management of private equity-backed IPOs around security offerings in a comprehensive sample of Reverse LBOs between 1981 and 2006. These RLBO companies are found to have positive level of discretionary current accruals (DCAs) at a much smaller magnitude compared to other IPOs. Buyout group's size is negatively related with the level of DCAs, suggesting that PE reputation mitigates accounting manipulations. Furthermore, PE reputation rather than earnings management can explain post-offering performance of RLBO companies.

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