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Earnings management and the underperformance of seasoned equity offerings

Article Abstract:

Discretionary accounting accruals have been found to generate substantial effects on the market performance of seasoned equity offerings. Statistics gathered from financial firms during the 1976-1990 test period revealed that discretionary accounting accruals tend to grow prior the offering period, reach its peak during the actual offering and eventually decline thereafter. Such a pattern may be observed despite the presence of low pre-issue and improved cash flow. However, results failed to establish a positive correlation between pre-issue discretionary current accruals and stock returns.

Stock Options, Accrual Accounting, Analysis, Management, Evaluation, Securities, Executive compensation, Accrual basis accounting, Earnings per share

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The time-series relations among expected return, risk, and book-to-market

Article Abstract:

The time-series relations among expected return, risk and book-to-market (B/M) at the portfolio level are analyzed. It is observed that B/M forecasts economically and statistically important time-variation in predicted stock returns. Using a three-factor model, B/M is also found to be strongly linked to changes in risk. However, B/M offers no incremental information on predicted returns after controlling for risk. The results show that the three-factor model explains time-varying returns better than a characteristics-based model.

Usage, Risk (Economics), Return on investment, Rate of return, Time-series analysis, Time series analysis

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Herding among security analysts

Article Abstract:

Research is presented describing the influence placed on market reactions by herding instinct of security analysts when forecasting movements in stock prices.

Methods, Financial analysts, Financial management

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