Abstract

http://ssrn.com/abstract=1024229
 
 

References (46)



 
 

Citations (19)



 


 



Corporate Fraud and Business Conditions: Evidence from IPOs


Tracy Yue Wang


University of Minnesota - Twin Cities - Carlson School of Management

Xiaoyun Yu


Indiana University - Kelley School of Business - Department of Finance; China Academy of Financial Research (CAFR)

Andrew Winton


University of Minnesota - Twin Cities - Carlson School of Management

December 23, 2009

Journal of Finance, Forthcoming

Abstract:     
We examine how a firm’s incentive to commit fraud when going public varies with investor beliefs about industry business conditions. Fraud propensity increases with the level of investor beliefs about industry prospects but decreases in the presence of extremely high beliefs. Evidence suggests that two mechanisms are at work: monitoring by investors, and short-term executive compensation, both of which vary with investor beliefs about industry prospects. We also find evidence that monitoring incentives of investors and underwriters differ. Our results are consistent with the predictions of recent models of investor beliefs and corporate fraud, and suggest that regulators and auditors should be especially vigilant for fraud during booms.

Number of Pages in PDF File: 72

Keywords: initial public offerings, investor sentiment, corporate fraud, financial intermediations

JEL Classification: E3, G24, G3

Accepted Paper Series


Download This Paper

Date posted: March 22, 2008 ; Last revised: May 14, 2014

Suggested Citation

Wang, Tracy Yue and Yu, Xiaoyun and Winton, Andrew, Corporate Fraud and Business Conditions: Evidence from IPOs (December 23, 2009). Journal of Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1024229

Contact Information

Tracy Yue Wang
University of Minnesota - Twin Cities - Carlson School of Management ( email )
19th Avenue South
Minneapolis, MN 55455
United States
Xiaoyun Yu (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3521 (Phone)
812-855-5875 (Fax)

China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030
China

Andrew Winton
University of Minnesota - Twin Cities - Carlson School of Management ( email )
321 19th Avenue South
Department of Finance
Minneapolis, MN 55455
United States
612-624-0589 (Phone)
612-626-1335 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 4,110
Downloads: 919
Download Rank: 12,677
References:  46
Citations:  19

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.390 seconds