Earnings Management Surrounding Seasoned Bond Offerings: Do Managers Mislead Ratings Agencies and the Bond Market

• Main Authors: GATON, Gary L., CHIYACHANTANA, Chiraphol New, CHUA, Choong Tze, GOH, Jeremy
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Corporate Finance; Finance and Financial Management; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3180; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4179/viewcontent/earnings_management_surrounding_seasoned_bond_offerings_av.pdf
• Institution: Singapore Management University

We study earnings management (EM) efforts surrounding seasoned bond offerings using discretionary current accruals. We find that issuers tend to inflate earnings performance prior to an offering. In order for EM efforts to effectively mislead ratings agencies and the bond market, they must lead to i...