DOI: 10.5176/2251-1997_AF18.196
Authors: Aprajita Pandey, Dr. J.K Pattanayak
Abstract:
This study investigates whether underwriter reputation plays a significant role in determining the level of earnings management practices in Indian IPO firms. The paper also examines the relationship existing between earnings management practices and underpricing. The study used cross sectional modified Jones model to measure the level of earnings management. Following Carter and Master, 10 point rating scale has been used to rank underwriters reputation. The study found negative relationship between underwriter reputation and earnings management but underwriter reputation is not a significant factor in determining earnings management practices. However, a significant positive relationship has been established between underpricing and earnings management referring to increased level of earnings management practices leading to a larger discount in the offer price.
Keywords: IPO, Earnings management, Underwriter, Underpricing
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