Agency costs of overvalued equity and earnings management in companies listed on WSE

• Authors: Kałdoński Michał , Jewartowski Tomasz
• Languages of publication: EN

Abstracts

EN

The aim of the paper is to study earnings management activities of companies listed on Warsaw Stock Exchange from the perspective of Jensen’s agency theory of overvalued equity (Jensen, 2005). Specifically, we analyze relations between equity overvaluation and various types of earnings management used by public companies between 2005 and 2015. We provide evidence partially consistent with Jensen’s theory. Specifically, our study reveals that overvaluation intensifies income-increasing accrual earnings management activities. However, we also find that overvaluation is not followed by real transactions management activities, as opposed to previous studies based on the US market. We provide some evidence that this difference might be driven by external monitoring executed by large institutional investors.

Keywords

EN

overvalued equity, earnings management, agency costs, agency theory, corporate finance, corporate governance

• Publisher: Uniwersytet Ekonomiczny w Poznaniu
• Journal: Economics and Business Review
• Year: 2017
• Volume: 3(17)
• Issue: 1

Dates

published

2017-03-30

Contributors

author

Kałdoński Michał

• Poznań University of Economics and Business, Faculty of Management, Department of Corporate Finance, Al. Niepodległości 10, 61-875 Poznań

author

Jewartowski Tomasz

• Poznań University of Economics and Business, Faculty of Management, Department of Corporate Finance, Al. Niepodległości 10, 61-875 Poznań

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Identifiers

DOI

10.18559/ebr.2017.1.2