Earnings Management Around Share Repurchases: A Note

Nikos Vafeas, Adamos Vlittis, Philippos Katranis and Kanalis Ockree

Abacus, 2003, vol. 39, issue 2, 262-272

Abstract: This work examines a subset of the important area of earnings management. Specifically, it seeks to identify the extent of earnings management preceding self‐tender offers for a sample of U.S. firms. Pre‐repurchase total accruals and discretionary current accruals were found to be somewhat lower for a sample of self‐tendering firms compared to a sample of industry‐ and performance‐matched control firms. Weak evidence of post‐buyback accruals reversal is also presented. The evidence is weakly consistent with the notion that share repurchases are employed by managers to exploit shareholders through earnings management.

Date: 2003
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