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International Conference on Engineering and Business Management (EBM 2010 PAPERBACK)

Chengdu,China,China,3.24-3.26,2010

ISBN: 978-1-935068-05-1 Scientific Research Publishing, USA

Paperback 6066pp Pub. Date: March 2010

Category: Engineering

Price: $280

Title: Accounting Discretion, Ownership Retention and Corporate Valuation
Source: International Conference on Engineering and Business Management (EBM 2010 PAPERBACK) (pp 1388-1392)
Author(s): Shenglan CHEN, School of Economics & Management, Inner Mongolia University, Hohhot, China
Abstract: Abstract: During the process of initial public offering (IPO), the information asymmetry among market participants is serious. This paper examines the effect of financial accounting information and ownership retention on IPO valuation, for a sample of firms that went public during 2001–2007. The results indicate that financial accounting information has significant effect on IPO issue price. After holding all other factors, the discretionary accruals are significantly positively related to the issue price, indicating that the corporate insiders use income increasing accruals to inflate issue price. Further examination shows that both discretionary accruals and ownership retention are endogenously chosen according to the conditions of IPO issuers.
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