Earnings Management Around Share Repurchases: A Note

Authors: Vafeas N.¹; Vlittis A.²; Katranis P.³; Ockree K.⁴

Source: Abacus, Volume 39, Number 2, June 2003 , pp. 262-272(11)

Buy & download fulltext article:

Price: $48.00 plus tax (Refund Policy)

Abstract:

This work examines a subset of the important area of earnings management. Specifically, it seeks to identify the extent of earnings management preceding self-tender offers for a sample of U.S. firms. Pre-repurchase total accruals and discretionary current accruals were found to be somewhat lower for a sample of self-tendering firms compared to a sample of industry- and performance-matched control firms. Weak evidence of post-buyback accruals reversal is also presented. The evidence is weakly consistent with the notion that share repurchases are employed by managers to exploit shareholders through earnings management.

Keywords: Earnings management; Share repurchases

Document Type: Research article

DOI: http://dx.doi.org/10.1111/1467-6281.00130

Affiliations: 1: The University of Cyprus 2: The University of Florida 3: PriceWaterhouseCooper in Nicosia 4: Washburn University

Publication date: 2003-06-01