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Consequences of real earnings management and corporate governance

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Date Issued:
2013
Summary:
I examine the impact of real earnings management (REM) and corporate governance on cash holdings. Extant research documents an increase in both cash holdings and REM activity in recent years and shows that agency conflicts influence both the levels and valuations of cash holdings. Motivated by agency problems of REM and Jensen's (1986) arguments concerning the free cash flow problem, I investigate whether opportunistic asset sales and reductions in discretionary expenditures are associated with levels and valuations of cash holdings. Prior research also shows that strong corporate governance mitigates opportunistic earnings management behavior and enhances the valuation of cash holdings. Using empirical models from prior research, I document that REM is positively associated with cash holdings, investors discount cash holdings of high REM firms, and, among high REM firms, valuations of cash holdings of weak corporate governance firms are discounted significantly lower relative to those of strong corporate governance firms. My study unites two lines of research by incorporating agency problems concerning REM with levels and valuations of cash holdings.
Title: Consequences of real earnings management and corporate governance: evidence from cash holdings.
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Name(s): Greiner, Adam J.
College of Business
School of Accounting
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Issuance: monographic
Date Issued: 2013
Publisher: Florida Atlantic University
Physical Form: electronic
Extent: ix, 104 p. : ill.
Language(s): English
Summary: I examine the impact of real earnings management (REM) and corporate governance on cash holdings. Extant research documents an increase in both cash holdings and REM activity in recent years and shows that agency conflicts influence both the levels and valuations of cash holdings. Motivated by agency problems of REM and Jensen's (1986) arguments concerning the free cash flow problem, I investigate whether opportunistic asset sales and reductions in discretionary expenditures are associated with levels and valuations of cash holdings. Prior research also shows that strong corporate governance mitigates opportunistic earnings management behavior and enhances the valuation of cash holdings. Using empirical models from prior research, I document that REM is positively associated with cash holdings, investors discount cash holdings of high REM firms, and, among high REM firms, valuations of cash holdings of weak corporate governance firms are discounted significantly lower relative to those of strong corporate governance firms. My study unites two lines of research by incorporating agency problems concerning REM with levels and valuations of cash holdings.
Identifier: 851064631 (oclc), 3360788 (digitool), FADT3360788 (IID), fau:4100 (fedora)
Note(s): by Adam J. Greiner.
Vita.
Thesis (Ph.D.)--Florida Atlantic University, 2013.
Includes bibliography.
Mode of access: World Wide Web.
System requirements: Adobe Reader.
Subject(s): Econometrics
Corporate governance -- United States
Corporations -- Corrupt practices -- United States
Corporations -- Finance -- Accounting
Industrial management
Held by: FBoU FAUER
Persistent Link to This Record: http://purl.flvc.org/fcla/dt/3360788
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU