Earnings myopia and private equity takeovers

• 成果类型: Article
• 署名作者: Hribar, Paul; Kravet, Todd; Krupa, Trent
• 署名单位: University of Iowa; University of Connecticut; University of Arkansas System; University of Arkansas Fayetteville
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-024-09844-6
• 发表日期: 2025
• 页码: 994-1035
• 关键词: free cash flow; institutional investors; managerial incentives; corporate-investment; Ownership structure; leveraged buyouts; term earnings; stock-market; FIRMS; real

摘要

We examine the role of private equity in alleviating earnings myopia induced by public markets. We first construct a measure of earnings myopia and show that this measure varies as predicted with determinants and effects of myopia. Then we show that public firms exhibiting earnings myopia realize an increased likelihood of takeover by private equity buyers. Cross-sectional analyses indicate that this relation is strongest when costs of earnings myopia are likely higher. Following private equity takeovers, firms exhibiting greater measures of earnings myopia realize improvements to R&D investment and productivity. The results add to the understanding of the role of private equity in identifying and alleviating earnings myopia within U.S. capital markets. This is important given the increasing size of private equity assets under management. Takeover premiums paid for myopic firms suggest a cost of earnings myopia at approximately 6.9% of firm value.