NDLI: Behavioral theories and the pricing of IPOs’ discretionary current accruals

Content Provider	Springer Nature Link
Author	Li, Xu
Copyright Year	2010
Abstract	The main purpose of this paper is to provide additional evidence about the effect of discretionary current accruals on the pricing of IPOs. This paper seeks to discriminate between two alternative explanations for the prior findings: (1) behavioral biases coupled with limited arbitrage; and (2) the sample- and period-specific nature of the results in the prior literature. The IPOs from 1962 to 1998 were used to obtain the following results. First, there was not a negative association observed between discretionary current accruals and subsequent price performance for the 1926–1971 period. Second, analysis reveals that the pattern of cross-sectional evidence is inconsistent with the predictions made by behavioral theories. Third, in the 1972–1998 period, evidence of predictable negative performance attributable to IPO discretionary current accruals is limited to NASDAQ firms. These findings are difficult to reconcile with the explanation of behavioral biases coupled with limited arbitrage.
Starting Page	87
Ending Page	104
Page Count	18
File Format	PDF
ISSN	0924865X
Journal	Review of Quantitative Finance and Accounting
Volume Number	37
Issue Number	1
e-ISSN	15737179
Language	English
Publisher	Springer US
Publisher Date	2010-08-20
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Market efficiency Behavioral theories Discretionary accruals IPOs Limited arbitrage Accounting/Auditing Finance/Investment/Banking Operations Research/Decision Theory Econometrics
Content Type	Text
Resource Type	Article
Subject	Finance Accounting

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