Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/101628

Privatization and insider incentives : an international test of earnings management in public offerings of state-owned enterprises

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Item Summary

Title: Privatization and insider incentives : an international test of earnings management in public offerings of state-owned enterprises
Authors: Nguyen, Anh Thuc
Keywords: earnings management
Issue Date: Aug 2011
Publisher: [Honolulu] : [University of Hawaii at Manoa], [August 2011]
Abstract: Massive privatization programs over the last two decades have created an unprecedented surge in share issues on stock markets worldwide. Privatization is applauded for enhancing efficiency of state-owned firms, as evidenced by financial and operational improvements of these firms after being sold to the private sector. The current study looks into the possibility that such improvements are confounded by managerial opportunistic behaviors during the privatization process. Discretionary accruals over a three year period around share issue of 63 privatized public offerings during the 1990s and 2000s have been examined against those of non-privatized firms and in relation to offering prices as well as post-privatization performance. Results show that discretionary accruals of privatized firms are negative during the year prior to privatization. Offering prices are influenced by pre-issue earnings management, upholding the suspicion of possible managerial manipulation to opportunistically lower prices. Interestingly, preprivatization discretionary accruals are found to be negatively related to postprivatization performance, suggesting that the reversal impact of pre-privatization accounting choices contribute to recorded financial improvements after state assets are sold. In addition, pre-issue accounting choices introduce noise to earnings and impair the value relevance of reported incomes on stock return in the aftermarket. In conclusion, the study provides evidence of management's opportunistic behavior during state ownership transfer and that the documented success of privatization is inflated by such behavior.
Description: Ph.D. University of Hawaii at Manoa 2011.
Includes bibliographical references.
URI/DOI: http://hdl.handle.net/10125/101628
Appears in Collections:Ph.D. - International Management



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