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- Publisher Website: 10.1016/j.jbankfin.2019.02.004
- Scopus: eid_2-s2.0-85061650481
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Article: Earnings Management and Post-split Drift
Title | Earnings Management and Post-split Drift |
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Authors | |
Keywords | Earnings management Stock split Earnings surprise Post-split drift |
Issue Date | 2019 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jbf |
Citation | Journal of Banking & Finance, 2019, v. 101, p. 136-146 How to Cite? |
Abstract | This paper explores whether firms manage their earnings after stock splits to meet the raised expectations from the market due to the positive signal sent by the splits. We first document that post-split drift mainly exists in the first three months and is positively associated with post-split standardized unexpected earnings (SUE). However, the higher post-split SUE of split firms is associated with higher discretionary accruals and abnormally lower R&D expenses. This result is consistent with our hypothesis that split firms overstate their post-split earnings by manipulating accruals and reducing R&D spending. Moreover, post-split abnormal returns increase with discretionary accruals and R&D reduction for about six months and tend to reverse over longer horizons, especially for firms with negative pre-split SUE. Overall, our results indicate that the post-split drift is a short-term phenomenon and partly attributable to the earnings management after the splits. |
Persistent Identifier | http://hdl.handle.net/10722/285073 |
ISSN | 2023 Impact Factor: 3.6 2023 SCImago Journal Rankings: 1.663 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chan, K | - |
dc.contributor.author | Li, F | - |
dc.contributor.author | Lin, TC | - |
dc.date.accessioned | 2020-08-07T09:06:21Z | - |
dc.date.available | 2020-08-07T09:06:21Z | - |
dc.date.issued | 2019 | - |
dc.identifier.citation | Journal of Banking & Finance, 2019, v. 101, p. 136-146 | - |
dc.identifier.issn | 0378-4266 | - |
dc.identifier.uri | http://hdl.handle.net/10722/285073 | - |
dc.description.abstract | This paper explores whether firms manage their earnings after stock splits to meet the raised expectations from the market due to the positive signal sent by the splits. We first document that post-split drift mainly exists in the first three months and is positively associated with post-split standardized unexpected earnings (SUE). However, the higher post-split SUE of split firms is associated with higher discretionary accruals and abnormally lower R&D expenses. This result is consistent with our hypothesis that split firms overstate their post-split earnings by manipulating accruals and reducing R&D spending. Moreover, post-split abnormal returns increase with discretionary accruals and R&D reduction for about six months and tend to reverse over longer horizons, especially for firms with negative pre-split SUE. Overall, our results indicate that the post-split drift is a short-term phenomenon and partly attributable to the earnings management after the splits. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jbf | - |
dc.relation.ispartof | Journal of Banking & Finance | - |
dc.subject | Earnings management | - |
dc.subject | Stock split | - |
dc.subject | Earnings surprise | - |
dc.subject | Post-split drift | - |
dc.title | Earnings Management and Post-split Drift | - |
dc.type | Article | - |
dc.identifier.email | Lin, TC: chunlin@hku.hk | - |
dc.identifier.authority | Lin, TC=rp01077 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.jbankfin.2019.02.004 | - |
dc.identifier.scopus | eid_2-s2.0-85061650481 | - |
dc.identifier.hkuros | 312345 | - |
dc.identifier.volume | 101 | - |
dc.identifier.spage | 136 | - |
dc.identifier.epage | 146 | - |
dc.identifier.isi | WOS:000463297100010 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0378-4266 | - |