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AN INVESTIGATION OF EARNINGS MANAGEMENT IN INDONESIAN MANUFACTURING INITIAL PUBLIC OFFERINGS

Gadjah Mada International Journal of Business

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Title AN INVESTIGATION OF EARNINGS MANAGEMENT IN INDONESIAN MANUFACTURING INITIAL PUBLIC OFFERINGS
 
Creator Gumanti, Tatang Ary
 
Subject earnings management; initial public offerings; total accruals and discretionary accruals
 
Description This paper examines whether the issuers of Indonesian manufacturing initial public offerings (IPOs) manage the firm's reported earnings by making income increasing discretionary accruals. The absence of market-determined prices for IPO shares prior to the offering has made issuers and underwriters to use nonprice information. The test was performed on a sample of 45 IPOs that went public during the period of July1991 through December 1994. The model used in this study follows the one developed by Friedlan (1994). The results show that there is no evidence that earnings management occurs among the sample firms. In other words, this study is unable to reject the null hypothesis that the issuers of Indonesian IPOs exercise accounting discretion that increases the reported earnings in the periods prior to the offering. In contrast, the study finds strong evidence of earnings management in the period after the offering, which could be interpreted as issuers trying to maintain the firm's performance after the offering by making income increasing discretionary accruals.
 
Publisher Master of Management, Faculty of Economics and Business, Universitas Gadjah Mada
 
Date 2003-08-12
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journal.ugm.ac.id/gamaijb/article/view/5628
 
Source Gadjah Mada International Journal of Business; Vol 5, No 3 (2003): September-December; 345-362
2338-7238
1411-1128
 
Language eng
 
Relation http://journal.ugm.ac.id/gamaijb/article/view/5628/4601