Earnings quality and ownership structure
the role of private equity sponsors
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Author
Contributions
- Harvard Business School - Contributor
Publication
2009 - Harvard Business School, Boston, Massachusetts
Language
English
Word Count
13,500 words, Guess
Page Count
54 pages
Identifiers
- OCLC Control Number542094847
- Open LibraryOL50204080M
Classifications
- LCCHB1
Description
"This study explores how firms' ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PE-backed firms). The findings indicate that PE-backed firms generally have higher earnings quality than those that do not have PE sponsorship, engage less in earnings management and report more conservatively both before and after the IPO. Further, PE-backed firms that are majority-owned by PE sponsors exhibit superior long-term stock price performance after they go public. These results stem from the professional ownership, tighter monitoring, and reputational considerations exhibited by PE sponsors"--National Bureau of Economic Research web site.
Description
This study explores how firms' ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PE-backed firms). The findings indicate that PE-backed firms generally have higher earnings quality than those that do not have PE sponsorship, engage less in earnings management, and report more conservatively both before and after the IPO. Further, PE-backed firms that are majority-owned by PE sponsors exhibit superior long-term stock price performance after they go public. These results stem from the professional ownership, tighter monitoring, and reputational considerations exhibited by PE sponsors. Keywords: conservatism, earnings management, private and public firms, private equity sponsors.
Subjects
Series Statement
- Working paper / Harvard Business School -- 09-104
Other Editions
- Earnings quality and ownership structure
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