Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/219941 
Year of Publication: 
2017
Series/Report no.: 
Institute of Economic Research Working Papers No. 119/2017
Publisher: 
Institute of Economic Research (IER), Toruń
Abstract: 
Firms use discretionary accounting choices to manage earnings disclosures around the time of certain types of corporate events. The IPO provides an opportunity to earnings management because of the significant information asymmetry between investors and issuers at the time of the offering. The main aim of the study is to empirically investigate the links between the earnings management and the portions of primary and secondary shares sold in IPO. In order to investigate whether the earnings management influences the issue of new shares and the sale of secondary shares I use Tobit and logit regressions, where discretionary accruals are the proxy for earnings management. Using a sample of 221 firms from WSE between 2005 and 2015 I do not find evidence that the increase of pre-IPO discretionary accruals positively affects the sale of primary shares in the IPO, but the analysis revealed that the reporting less limits the probability of the new shares issuance. In turn, the sale of secondary shares in the IPO is more likely in companies using a conservative earnings management. Furthermore, negative discretionary accruals increase the portion of secondary shares in the IPO.
Subjects: 
Initial public offering
IPO
Primary shares
Secondary shares
Earnings management
JEL: 
G14
G32
G23
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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