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A Comparative Analysis of Real and Accrual Earnings Management around Initial Public Offerings under Different Regulatory Environments

Journal of Business Finance & Accounting, DOI: 10.1111/jbfa.12201, Forthcoming

Posted: 27 Feb 2013 Last revised: 29 Jul 2016

Mohammad Alhadab

Al al-Bayt University; University of Leeds - Division of Accounting and Finance

Iain Clacher

University of Leeds - Leeds University Business School (LUBS)

Kevin Keasey

University of Leeds - Division of Accounting and Finance

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Abstract

While earnings management around IPOs has been researched in a number of settings, there has been a relative absence of work that analyses the impact of the regulatory environment on such activities. We find that the regulatory environment does impact the real and accrual earnings management activities of IPO firms. Our results show that IPO firms listing on the lightly regulated UK Alternative Investment Market (AIM) have higher (lower) levels of accrual based and sales based (discretionary expenses based) earnings management around the IPO than firms listing on the more heavily regulated Main market in the UK.

Keywords: Initial Public Offerings, earnings management, regulatory environment, accounting choices

Suggested Citation

Alhadab, Mohammad and Clacher, Iain and Keasey, Kevin, A Comparative Analysis of Real and Accrual Earnings Management around Initial Public Offerings under Different Regulatory Environments. Journal of Business Finance & Accounting, DOI: 10.1111/jbfa.12201, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2186502 or http://dx.doi.org/10.2139/ssrn.2186502

Mohammad Alhadab (Contact Author)

Al al-Bayt University ( email )

Faculty of Finance and Business Administration
Department of Accounting
Mafraq, 25113
Jordan
00962796811823 (Phone)

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

Iain Clacher

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

Kevin Keasey

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom
+44 (0)113 343 2618 (Phone)

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