文章基本信息

标题：The Relationship between Earnings Management and Equity Market Timing
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作者：Matheus da Costa Gomes ; João Paulo Augusto Eça ; Marcelo Botelho da Costa Moraes 等
期刊名称：RAC - Revista de Administração Contemporânea
印刷版ISSN：1415-6555
电子版ISSN：1982-7849
出版年度：2021
卷号：25
期号：6
页码：e200289-e200289
DOI：10.1590/1982-7849rac2021200289.en
语种：English
出版社：Associação Nacional de Pós-Graduação e Pesquisa em Administração
摘要：Objective: this study aims to verify if companies that practice equity market timing have higher earnings management levels around the stock issue period. Method: we used a sample of 68 seasoned equity offerings (SEOs) in Brazil from 2004-2015. First, we ranked the sample among companies that used market timing (timers) behavior in the SEOs and those that did not (non-timers). Second, we estimated each company’s earnings management levels by the Modified Jones and Modified Jones with ROA models. Finally, we tested the relationship between earnings management and equity market timing using a linear regression model. Results: the results show that the timers managed earnings more intensively in the quarters around SEOs than the non-timers. This happens to increase net income and consequently improve profitability ratios. Therefore, to explore opportunity windows, managers can inflate accounting profit through accruals and influence the market’s ability to correctly price shares. Conclusion: Brazilian companies practice earnings management as a way of exploiting opportunity windows in the stock market. The conclusion reinforces the need for a careful analysis of the company’s profits by investors, analysts, auditors, and regulators while allowing efforts to avoid such practices through compliance, governance, and regulation.