Yueh-Hsiang Lina and Ruei-Shian Wub
a Department of Finance, College of Business, National Taipei University of Business, Taipei, Taiwan; b College of Management, Yuan Ze University, Taoyuan, Taiwan
ABSTRACT
This study explores whether high-growth firms use accruals as a signal, rather than as a misleading device, in seasoned equity offerings (SEOs). For high-growth companies only, we find a positive relation between preSEO discretionary accruals and SEO announcement returns. We fail to find a negative relation between pre-SEO accruals and post-SEO long-run returns. Finally, we observe a positive relation between pre-SEO accruals and the long-run operating performance. Our findings suggest that high-growth firms are more likely to use high abnormal accruals during SEOs to signal managerial optimistic perspectives, while managerial opportunism is more likely to appear in non-high-growth firms.
KEYWORDS
Discretionary accrual; managerial opportunism; managerial optimism; seasoned equity offerings; signaling
To link to this article: https://doi.org/10.1080/16081625.2018.1424000
