مدیریت سود در IPO های مالزی: بحران شرق آسیا، کنترل مالکیت و عملکرد پس از IPO

We find evidence of income-increasing earnings management in Malaysian IPOs, which occurs primarily for IPOs during a period of severe economic stress (the East Asian crisis). Within the high-ownership-concentration Malaysian market, post-IPO control concerns also appear to constrain IPO earnings management: owners seem willing to accept reduced IPO proceeds and signaling opportunities to increase the likelihood of retaining control of the company post-IPO. The requirement to provide a profit guarantee does not seem to greatly affect earnings management. IPO companies engaging in aggressive income-increasing earnings management have significantly worse market-based performance than their more conservative counterparts, but again only for IPOs issued during the economic crisis period. Overall, the results suggest that personal liquidity concerns are an important factor in IPO decisions during the economic crisis.

Most prior studies of earnings management in the context of IPOs (e.g., Chen et al., 2005, DuCharme et al., 2001, DuCharme et al., 2004, Roosenboom et al., 2003 and Teoh et al., 1998a) suggest that companies opportunistically manage their earnings upward through income-increasing accruals to increase offering proceeds. 1 These studies also typically find that issuers with unusually high accruals in the IPO year experience poor post-IPO stock returns. More recently, Ball and Shivakumar (2008) question the “hypothesis of widespread and substantial earnings management by IPO firms," arguing that enhanced scrutiny by market monitors and regulators likely reduces managers' incentives to engage in such activity. While a small number of prior studies investigate cross-sectional variation seeking to assess the determinants of IPO earnings management propensity in different contexts (e.g., Aharony et al., 1993, Chen et al., 2005, Cormier and Martinez, 2006, Nagata and Hachiya, 2006, Neill et al., 1995 and Zhou and Elder, 2002), these mainly use data from developed markets. The present study investigates the pervasiveness of earnings management across IPOs and the specific factors that affect decisions to manage earnings, within the context of a specific developing market, Malaysia. The Malaysian environment is particularly interesting as it has several distinctive features that may affect managerial incentives to manage earnings within the IPO context. First, there is a high level of ownership concentration (often involving family ownership) in Malaysia, and higher levels of post-IPO involvement can reduce short-term incentives. Second, prospectus earnings forecasts are mandatory, which may discourage managers from unrealistic optimism, especially when coupled with the requirement for some companies during the study period to provide profit guarantees. Third, the period encompassed by the analysis includes the East Asian crisis, a period of significant economic stress that reduced profitability and confidence. These features increase the difficulty of taking a company to market. However, if a successful IPO is necessary to address liquidity issues for a company (or its owners), IPO deferral may not be an easy option. Fourth, Malaysia provides a rich environment to assess the relative impacts of owners' short-term wealth gain/loss from the IPO, signaling, and post-IPO control concerns while controlling for other potential determinants of earnings management (e.g., auditor reputation, underwriter prestige, company age, initial returns, leverage, and company size). Finally, it provides an opportunity to investigate the relationship between earnings management and post-IPO market-based performance heretofore unexplored. Using a sample of 250 IPOs over the period 1990–2000, the results provide evidence of IPO-year income-increasing earnings management, but this occurs primarily during the period of economic stress. The requirement to provide a profit guarantee does not appear to greatly affect earnings management. Within the high-ownership-concentration market of Malaysia, concerns about post-IPO control appear to constrain IPO earnings management; that is, owners apparently accept reduced IPO proceeds to increase their likelihood of retaining post-IPO control of the company. We speculate that this may reflect decisions to use an IPO to maintain owners' personal consumption during the difficult economic climate of the Asian crisis period. Older companies and those audited by a prestigious audit firm exhibit lower levels of earnings management, consistent with notions of reduced information asymmetry and/or reduced opportunities for managers to manipulate earnings. While IPO companies engaging in aggressive (income-increasing) earnings management experience worse post-IPO market-based performance than their more conservative counterparts (in line with prior research), this occurs only for IPOs issued during the economic crisis period. The remainder of the paper proceeds as follows. Section 2 provides a brief description of the Malaysian institutional context for the study, followed by hypothesis development in Section 3. Section 4 outlines the research methods, and Section 5 describes sample selection and data. Section 6 reports the results of the empirical study, and Section 7 concludes.

Analysis using a sample of 250 Malaysian IPOs over the period 1990–2003 indicates income-increasing earnings management in the IPO year. However, these overall results appear to be driven mainly by IPOs during 1997 and 1998, 2 years reflecting the coincidence of the East Asian crisis and a requirement for many companies to provide profit guarantees. Further detailed univariate analysis suggests that income-increasing earnings management is not a general phenomenon. Rather, it is determined primarily by a period of economic stress (the East Asian crisis) with incentives relating to the profit-guarantee requirement of relatively little importance. Multivariate analysis confirms the importance of the crisis period and also identifies the significant impact of the owners' continuing interest in the post-IPO company. A positive relationship between retained ownership and earnings management is consistent with owners having concerns about post-IPO control of the company and does not suggest “opportunistic" earnings management to protect owners' wealth or owners seeking to signal IPO quality. Older companies and those audited by a prestigious (i.e., Big 5) audit firm exhibit lower levels of income-increasing earnings management, consistent with arguments that high-quality audits reduce opportunities for managers to manipulate earnings. As a whole, our results support the argument that “opportunistic" IPO earnings management is less pervasive than prior research suggests ( Ball & Shivakumar, 2008). Environmental and company-specific factors appear to significantly influence earnings management decisions. In particular, within the high-ownership-concentration market of Malaysia, control concerns exert a significant influence over IPO earnings management. Post-IPO market-based performance depends on the benchmark adopted. IPO companies significantly underperform the market benchmark over the three-year post-IPO period, but there is no significant difference in performance when a matched-company benchmark was used. The relationship between earnings management and post-IPO performance is contingent on environmental factors. For IPOs issued during non-crisis years, income-increasing IPO earnings management is less pronounced and post-IPO market-based performance is not associated with the level of IPO-year earnings management. However, for IPOs during the Asian crisis period, aggressive (income-increasing) earnings management IPO companies performed less well than their more conservative counterparts. Combining this evidence with that for the level of retained ownership suggests that owners' concerns about personal liquidity during the crisis is a significant contributory factor in encouraging the use of income-increasing DCA to facilitate IPO issues during a difficult economic climate.