Accounting Quality and Media Attention Around Seasoned Equity Offerings

International Journal of Accounting and Information Quality. Special Issue on Accounting Quality, 26(2), 2017

33 Pages Posted: 14 Mar 2017 Last revised: 17 Jan 2018

See all articles by Fernando Comiran

Fernando Comiran

University of San Francisco - School of Management

Tatiana Fedyk

University of San Francisco

Joohyung Ha

University of San Francisco - School of Management

Date Written: February 27, 2017

Abstract

This paper investigates how media coverage affects quality of accounting information for seasoned equity offering (SEO) firms. Media attention can either serve as a “watchdog” (watchdog hypothesis) and effectively reduce earnings management; or, alternatively, can create an extra pressure on managers putting them under spot so that managers try to fulfill market expectations and manage earnings (attention pressure hypothesis). We consider two types of earnings management: accrual earnings management, and real earnings management. Using a sample of SEOs from 1993 to 2014, we find that media serves as a watchdog for real earnings management, but does not affect accrual manipulations. Our findings hold after we control for endogenous factors affecting firms’ earnings management choices, and when we use alternative time periods for media coverage. This paper is the first to demonstrate that media attention affects the quality of accounting information during equity offerings as it successfully reduces real earnings management.

Keywords: media attention, real earnings management, accounting information quality, seasoned equity offerings

Suggested Citation

Comiran, Fernando and Fedyk, Tatiana and Ha, Joohyung, Accounting Quality and Media Attention Around Seasoned Equity Offerings (February 27, 2017). International Journal of Accounting and Information Quality. Special Issue on Accounting Quality, 26(2), 2017. Available at SSRN: https://ssrn.com/abstract=2931635 or http://dx.doi.org/10.2139/ssrn.2931635

Fernando Comiran

University of San Francisco - School of Management ( email )

San Francisco, CA 94117
United States

Tatiana Fedyk (Contact Author)

University of San Francisco ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

Joohyung Ha

University of San Francisco - School of Management ( email )

San Francisco, CA 94117
United States

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