- مبلغ: ۸۶,۰۰۰ تومان
- مبلغ: ۹۱,۰۰۰ تومان
Purpose This paper investigates how media coverage affects the quality of accouning information for seasoned equity offering (SEO) firms. Design/methodology/approach The sample includes SEOs completed between January 1993 and December 2014 in the United States that are available from Thomson Financial’s Securities Data Company (SDC). The FactSet database was used to measure the amount of media coverage. The paper considers two types of earnings management: accrual-based earnings management and real earnings management. Findings This study finds that the media serves as a watchdog for real earnings management, but does not affect accrual manipulations. These findings hold when endogenous factors affecting firms’ earnings management choices are controlled for, and also when alternative time windows for media coverage are examined. Originality/value 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.
Miller and Skinner (2015) note that “It is now clear that the role of the media is of interest in its own right, especially if it does more than simply disseminate news. One promising approach is to consider the media’s interaction with other players in financial markets, such as analysts, auditors, investors etc. While some research on the media has occurred, this area is still relatively undeveloped” (p. 232). This paper considers the role of the media in preventing two types of earnings management around SEOs: accrual-based earnings management and real activities manipulation. After establishing a relationship between the media and earnings management, it further studies the differential roles of media and auditors in enhancing the earnings quality. Prior literature demonstrates that media coverage can serve as a “watchdog” and prevent financial misreporting and fraud (Miller, 2006; Kuhnen and Niessen, 2012; Dai et al., 2015). Alternatively, prior research also suggests that the media can “force” a manager to manage earnings by placing the manager in the spotlight, creating high expectations, and adding to the manager’s overconfidence (Schrand and Zechman, 2012; Hribar and Yang, 2016). Using a sample of SEOs from 1993 to 2014 and news coverage data from the FactSet database, this study shows that the media effectively reduces REM but is inefficient in preventing accrual-based earnings management in both the fiscal year prior to and the one following the SEO. However, the results are the opposite for auditors: while auditors are effective in reducing accrual-based earnings management, they actually increase REM. This happens because REM is not easily detected by auditors and regulators (Graham et al., 2005) and is chosen by managers during times of high scrutiny (Cohen et al., 2008). This is, to the authors’ knowledge, the first study to highlight the role of the media as an REM “watchdog” around SEOs. It further demonstrates that auditors and the media complement each other in preventing different types of earnings management: While auditors effectively reduce accrual-based earnings management, the media’s role is to prevent earnings management in the case that stymies auditors, namely, real activities manipulations. This finding enriches our understanding of how multiple parties influence managers’ earnings management decisions.