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Earnings Management Around Share Repurchases: A Note

Author

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  • Nikos Vafeas
  • Adamos Vlittis
  • Philippos Katranis
  • Kanalis Ockree

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.

Suggested Citation

  • Nikos Vafeas & Adamos Vlittis & Philippos Katranis & Kanalis Ockree, 2003. "Earnings Management Around Share Repurchases: A Note," Abacus, Accounting Foundation, University of Sydney, vol. 39(2), pages 262-272, June.
    • Handle: RePEc:bla:abacus:v:39:y:2003:i:2:p:262-272
    DOI: 10.1111/1467-6281.00130
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    References listed on IDEAS

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    1. Louis, Henock & Robinson, Dahlia, 2005. "Do managers credibly use accruals to signal private information? Evidence from the pricing of discretionary accruals around stock splits," Journal of Accounting and Economics, Elsevier, vol. 39(2), pages 361-380, June.
    2. Lionel Escaffre & Réda Sefsaf, 2014. "Earnings management through goodwill impairment: the case of the CAC All-Tradable [La gestion des résultats à travers la dépréciation des écarts d'acquisition : Cas des entreprises du CAC All-Trada," Post-Print hal-01899793, HAL.
    3. Salim Chahine & Mohamad Zeidan & Hala Dairy, 2012. "Corporate governance and the market reaction to stock repurchase announcement," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(4), pages 707-726, November.
    4. Setia-Atmaja, Lukas & Haman, Janto & Tanewski, George, 2011. "The role of board independence in mitigating agency problem II in Australian family firms," The British Accounting Review, Elsevier, vol. 43(3), pages 230-246.
    5. Lionel Escaffre & Réda Sefsaf, 2013. "L'impact de l'évaluation IFRS des écarts d'acquisition sur la gestion des résultats : Cas de la France et du Royaume-Uni," Post-Print hal-00996787, HAL.

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