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Increase Corporate Value
Managerial optimism or managerial opportunism: From a seasoned equity offerings perspective*
Time:2022-02-17 15:32

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



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.



Discretionary accrual; managerial opportunism; managerial optimism; seasoned equity offerings; signaling


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