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Durga Prasad Samontaray

Associate Professor

Associate Professor, Department of Finance

كلية إدارة الأعمال
College of Business Administration, Building 67, Second Floor, Office No. S36

Real Earnings Management and Persistence of Firm Value: Evidence from India

Abstract The present study aims to examine the impact of real earnings management on the future value of the firm and its persistence. The study also tests suspect firm effects on the relationship between real earnings management and the future value of the firm. The sample of the present study consists of all listed non-financial firms from the year 2011 to 2018. Real earnings management has been measured in three alternative ways viz., abnormal operating cash flows, abnormal discretionary spending, and abnormal production cost. Tobin's Q is used as a measure of firm value. The interaction term of real earnings management and Tobin's Q is used to test firm value persistence. The results of the analysis disclose that out of three measures of real earnings management, abnormal reduction in discretionary spending only has a significant negative impact on the persistence of firm value. Moreover, the suspect firm analysis reveals that when the underlying motive of real earnings management is to meet zero earnings, both abnormal increases in operating cash flows and abnormal reduction in discretionary spending have a significant negative impact on firm value persistence. Keywords Real Earnings Management; Suspect Firm Effect; Firm Value; Opportunistic Earnings Management; Signalling Earnings Management

Publication Work Type
Research Article
Publisher Name
Journal of Asian Finance, Economics and Business (JAFEB)
Volume Number
8
Issue Number
12
Pages
223-336
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by Atul Bansal, Durga Prasad Samontaray, Rahul Kumar
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Published in:
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Underpricing of initial public offerings (IPOs) is a common phenomenon that widely studied over many periods and a broad range of countries. This paper examines the extent of underpricing of IPOs…

by Durga Prasad Samontaray, Abdullah Saud Al Zuwidi
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Published in:
Corporate Ownership and Control (VIRTUS INTERPRESS)