Journal of
Accounting and Taxation

  • Abbreviation: J. Account. Taxation
  • Language: English
  • ISSN: 2141-6664
  • DOI: 10.5897/JAT
  • Start Year: 2009
  • Published Articles: 206

Full Length Research Paper

Earnings management and performance of French IPO companies

Djerbi Chiraz
  • Djerbi Chiraz
  • Department of Financial and Accounting, Universities Higher Institute of Business Administration (ISAAS), Tunisia
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Jarboui Anis
  • Jarboui Anis
  • Department of Financial and Accounting, Universities Higher Institute of Business Administration (ISAAS), Tunisia
  • Google Scholar


  •  Accepted: 15 April 2013
  •  Published: 31 May 2013

Abstract

In this paper, we examine the impact of discretionary current accruals on the performance of French IPO companies. We first note income-increasing earnings management in the first year as a public company and not in the year before the IPO (Initial Public Offerings). Based on a sample of 139 French IPOs over the period 1999 to 2007, including 38 failures, we also document that companies associated with aggressive earnings management in the IPO process, tend to suffer from subsequently poor returns and to delist for performance failure after IPO. However, we find no evidence to suggest that the level of initial return is negatively related to discretionary current accruals.

Key words: Initial public offerings, earnings management, initial return, long-run stock market performance, delisting risk.