Abstract
This study investigates the determinants of accrual-based earnings management and real earnings management (REM), and explores the influences of these earnings management activities on post-issue performance of private placements in Taiwan. The results show that investor type influences a firm’s REM activities before a private placement. Compared with discretionary current accruals, REM leads to significantly reduced long-term performance. Notably, the relationship between pre-issue REM and long-run performance is significantly negative for non-strategic private placement firms, whereas the relationship is insignificant for strategic private placement firms.
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