Affiliation:
1. National Economics University, Vietnam
Abstract
Based on a sample of 161 newly listed firms on the Ho Chi Minh Stock Exchange (HOSE) from 2009 to 2016, the study investigates the pattern of earnings management and stock performance in the long run. This study then explores the effect of earnings management on stock performance in the long run around the listing phenomenon. Two models based on current accruals were adopted for this study to estimate earnings management (Teoh et al., 1998a, 1998b). The study consistently finds that managers have manipulated their company’s earnings in the pre-listing year but not in the listing year when earnings management is measured by current accruals models. In addition, in line with previous research, significant underperformance was found in all measures over three holding periods: 12, 24 and 36 months. Finally, the results also demonstrate that companies associated with aggressive current accruals in the year before listing tend to suffer from post-listing earnings and share return underperformance. The more aggressive the practice of earnings management, the greater its adverse effect on stock performance in the following years.
Subject
Organizational Behavior and Human Resource Management,Management Science and Operations Research,Finance
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