Title: Accounting accruals, earnings management and future performance of IPOs

Authors: Meisam Omidian; Habibollah Nakhaei; Karim Nakhaei

Addresses: Department of Accounting, Birjand Branch, Islamic Azad University, Birjand, Iran ' Department of Accounting, Birjand Branch, Islamic Azad University, Birjand, Iran ' Department of Accounting, Birjand Branch, Islamic Azad University, Birjand, Iran

Abstract: This paper investigates the impact of public-listing age on the future operating performance of Iranian firms making initial public offerings (IPOs) during the period 2003 to 2014, and examines whether accounting accruals and earning management contribute to this impact. In addition, return on net operating assets (RNOA), operational accruals (TAC) and the earnings management (EM) of 81 initial public offerings have been calculated, with the aim of helping capital market participants, policy makers, financial analysts and potential investors thorough the findings of this study, in the stock exchange of financial assets and security investment projects. Multivariate linear regression was used in analysing data. We found that, on average, public-listing age and accounting accruals have a direct effect on future operating performance in Iran, and that earning management does play an indirect role on performance.

Keywords: accounting accruals; future performance; operating performance; return on net operating assets; RNOA; earnings management; operating profit; initial public offerings; IPO; Iran; financial assets; security investment.

DOI: 10.1504/AJAAF.2016.077598

African Journal of Accounting, Auditing and Finance, 2016 Vol.5 No.1, pp.25 - 37

Received: 04 Jan 2016
Accepted: 22 Apr 2016

Published online: 06 Jul 2016 *

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