Earnings management and the market performance of stock dividend issuing firms: NZ evidence
Abstract
Purpose
The purpose of this paper is to extend the literature on earnings management by examining whether stock dividends provide management with an incentive to manipulate earnings.
Design/methodology/approach
This paper employs a refined accrual model that controls the performance effects in estimating the part of accruals subject to managerial discretion.
Findings
Stock dividend issuing firms increase accruals substantially in the issue year followed by poor earnings and stock price performance in the subsequent year. More importantly, discretionary accruals of stock dividend issuing firms are negatively correlated with the declines in both future earnings and abnormal stock returns.
Originality/value
This paper examines the hypothesis that stock dividend firms engage in earnings management.
Keywords
Citation
Koerniadi, H. and Tourani‐Rad, A. (2008), "Earnings management and the market performance of stock dividend issuing firms: NZ evidence", Accounting Research Journal, Vol. 21 No. 1, pp. 4-15. https://doi.org/10.1108/10309610810891319
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited