Do initial public offering firms manage accruals? Evidence from individual accounts

• 成果类型: Article
• 署名作者: Cecchini, Mark; Jackson, Scott B.; Liu, Xiaotao
• 署名单位: University of South Carolina System; University of South Carolina Columbia; Northeastern University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-011-9160-9
• 发表日期: 2012
• 页码: 22-40
• 关键词: earnings management; performance; QUALITY; expense

摘要

We examine whether initial public offering (IPO) firms exercise discretion over an individual accrual account on the balance sheet-the allowance for uncollectible accounts-and an individual accrual account on the income statement-bad debt expense. Our research design exploits a unique disclosure requirement related to these accounts (i.e., the ex post disclosure of write-offs of uncollectible accounts), which enables us to develop refined expectation models. We provide evidence that IPO firms have conservative, not aggressive, allowances in the annual periods adjacent to their stock offerings. In fact, the average IPO firm has an allowance that is over four-times leading write-offs. We also provide evidence that IPO firms record larger, not smaller, bad debt expense and are less likely to record income-increasing bad debt expense than matched non-IPO firms. These results challenge the view that IPO firms understate receivables-related accrual accounts.