This paper investigates whether firms conducting seasoned equity offerings in Korea manage earnings. The wealth of the old shareholder is increased as the offering price of the shares with consideration was earmarked highly, because the outside investors can see brightly future view of a business. When seasoned equity offerings doing, a business has motive to make the uptrend management of earnings.
The sample consists of 315 firms conducting seasoned equity offerings between 1990 and 1997. To measure earnings management, I estimate discretionary accruals and discretionary cur rent accruals using the methods adopted Tech. et. al(1998) and in Rangan(1998).
The empirical results with the hypothesis of this study are as follows.
The hypothesis concerns the timing of earnings management during the period of bull and bear market pattern. Analysis results firms turned out manage earnings to seasoned equity offerings right before and after period.