TY  - JOUR
AB  - Purpose Most prior literature focuses on how managers’ immediate needs affect their current earnings management. The purpose of this paper is to expand this body of literature by investigating the managerial motivation in a multi-period setting. The authors believe that managers’ incentive to engage in earning management around current equity issues is not only determined by the companies’ immediate need, but that it is also determined by their longer-term financing need.Design/methodology/approach The authors examine all issuances of common stock, whether they are issued as seasoned equity offerings or whether as a reissuance of previously repurchased stock. They believe that the motivations for earnings management are similar for all these various stock-issuance events, which result in an increase in the number of outstanding common stock items.Findings The results of this paper reveal that those firms with less of a need for subsequent equity issuances are more likely to engage in “income- increasing” earnings management before their equity issuances. Conversely, equity issuers with more of a need for subsequent equity issuances would be more concerned about the potential impact of current earnings management on their future reported earnings and, therefore, would be less likely to manage earnings.Originality/value This paper contributes to the literature by extending the findings of the prior literature, showing that managerial discretion does not only affect the total magnitude of earnings management, but that it also impacts the timing of the earnings management activities. Insights gained from our research may contribute to the literature and enable a better understanding of firms’ financial reporting strategy from a longer-run view.
VL  - 18
IS  - 1
SN  - 1475-7702
DO  - 10.1108/RAF-01-2018-0019
UR  - https://doi.org/10.1108/RAF-01-2018-0019
AU  - Wang Guannan
AU  - Hagigi Moshe
PY  - 2019
Y1  - 2019/01/01
TI  - The effect of the need for subsequent seasoned equity offerings on earnings management motivation
T2  - Review of Accounting and Finance
PB  - Emerald Publishing Limited
SP  - 25
EP  - 52
Y2  - 2024/05/13
ER  -