Disclosure Frequency and Earnings Management

Posted: 1 Sep 2006

See all articles by Hoje Jo

Hoje Jo

Santa Clara University

Yongtae Kim

Santa Clara University - Leavey School of Business

Abstract

Using a sample of seasoned equity offerings (SEOs), we examine the relation between disclosure frequency and earnings management and the impact of this relation on SEOs' post-issue performance. We contend that firms with extensive disclosure are less likely to face information problems, leading to less earnings management and better post-issue performance. Consistent with these conjectures, this study presents evidence that disclosure frequency is inversely related to earnings management and positively associated with post-issue performance. In addition, we find that transparency-reducing disclosure is concentrated in firms that substantially, but temporarily increase disclosure prior to the offering. A non-persistent increase in disclosure is positively associated with earnings management and negatively associated with post-SEO stock performance.

Keywords: Seasoned equity offerings, Earnings management, Disclosure frequency, Post-issue performance

JEL Classification: G14, G24, G32, M41

Suggested Citation

Jo, Hoje and Kim, Yongtae, Disclosure Frequency and Earnings Management. Journal of Financial Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=927798

Hoje Jo

Santa Clara University ( email )

Santa Clara, CA 95053
United States
408-224-8890 (Phone)
408-554-4029 (Fax)

Yongtae Kim (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States
(408) 554-4667 (Phone)
(408) 554-2331 (Fax)

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