The sharpest tool in the shed: IPO financial statement management of STEM vs. non-STEM firms

• 成果类型: Article
• 署名作者: Fedyk, Tatiana; Singer, Zvi; Soliman, Mark
• 署名单位: University of San Francisco; Universite de Montreal; HEC Montreal; University of Southern California
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-017-9412-4
• 发表日期: 2017
• 页码: 1541-1581
• 关键词: real activities manipulation; earnings management; knowledge spillovers; information-content; patent citations; valuation; performance; revenue; QUALITY; determinants

摘要

The valuation of STEM (science, technology, engineering, and math) firms has recently gained attention in the literature. Research has shown that, for valuation of STEM firms, accounting items such as sales growth and R&D expenditures matter more than bottom-line earnings. We examine whether, around the time of the IPO, STEM managers apply discretion over the accounting items most weighted by investors for their valuation. We find that investors tend to weigh sales growth and R&D more heavily than earnings in valuing STEM firms and that managers respond by managing those items rather than bottom-line earnings as in prior research. We find that future stock returns of STEM firms are negatively associated with sales management and not with abnormal accruals as for non-STEM firms. Our results illuminate the differential behavior of STEM managers and highlight the importance of a departure from the traditional IPO earnings management paradigm, which assumes that firms mainly manage their earnings.