Can Investors Detect Accrual-Based Earnings Management? The Moderating Role of Information Asymmetry in IPO Underpricing in Indonesia (Journal of Economic Bussines and Accounting (COSTING))
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- A total of 163 companies or 79.5% experienced underpricing during their initial trading periods.p.2
- After applying purposive sampling criteria, the study evaluated a final sample of 151 listed companies.p.11
- Discretionary accruals and pre-IPO financial leverage showed no statistically significant direct influence on IPO underpricing.p.11
- Information asymmetry acts as a pure moderator on the relationship between discretionary accruals and IPO underpricing, with an interaction coefficient of −0,093783.p.12
Key insights
- Investor demand and enthusiasm during bookbuilding serve as the main direct driver of initial IPO price jumps in Indonesia.p.15
- Accrual-based earnings management evaluated via the Modified Jones Model is not directly detected or priced by general public investors during IPO debuts.p.14
- Pre-IPO debt-to-assets leverage ratios do not significantly dictate the level of underpricing expected by market participants.p.14
- High information asymmetry causes investors to rely more heavily on reported earnings figures, strengthening the impact of earnings management on pricing.p.15
- When financial transparency is high, investors are better able to identify discretionary accounting choices and neutralize earnings management effects.p.15
- Information asymmetry does not significantly moderate the impact of financial leverage or investor sentiment on underpricing.p.13
- Measuring underpricing using 5-day cumulative abnormal returns mitigates right-censoring distortion caused by exchange price limit rules.p.9
Topics and entities
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