TY  - JOUR
AB  - We examine whether discretionary accruals of firms obtaining substantial external financing can be explained by managerial manipulation or managerial overoptimism. Insider trading patterns and press releases around equity and debt financing suggest that managers are more optimistic about their firms around debt financing. Consistent with earlier studies, we find that discretionary current accruals peak when firms obtain equity financing. However, we also find that discretionary accruals peak when firms obtain debt financing. Moreover, discretionary accruals are higher for firms that rely on debt rather than on equity financing. The results are robust to controlling for firm characteristics, excluding small and distressed firms, and using alternative measures of discretionary accruals. These findings support the hypothesis that managerial overoptimism distorts financial statements of firms obtaining external financing.
VL  - 3
IS  - 2
SN  - 1940-5979
DO  - 10.1108/19405979201100005
UR  - https://doi.org/10.1108/19405979201100005
AU  - Marciukaityte Dalia
AU  - Szewczyk Samuel H.
PY  - 2011
Y1  - 2011/01/01
TI  - Financing Decisions and Discretionary Accruals: Managerial Manipulation or Managerial
Overoptimism
T2  - Review of Behavioural Finance
PB  - Emerald Group Publishing Limited
SP  - 91
EP  - 114
Y2  - 2024/04/20
ER  -