Does the monitoring role of buyout houses improve discretionary accruals quality?

Chong Wang

Accounting and Finance, 2010, vol. 50, issue 4, 993-1012

Abstract: Using a sample of reverse leveraged buyout (‘reverse‐LBO’) firms, I find that discretionary accruals quality (AQ), the quality of accruals that are subject to management discretion, significantly improves from pre‐LBO to post‐reverse LBO. Moreover, buyout houses’ board seats and the length of firms’ stay‐in‐private periods are significant explanatory variables for the cross‐sectional variation in discretionary AQ for post‐reverse‐LBO firms. My findings suggest that the monitoring provided by private equity buyout houses improves discretionary AQ, consistent with the view of Jensen (1989a,b) that LBOs are a solution to inefficiencies that arise from agency problems.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/j.1467-629X.2010.00351.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:50:y:2010:i:4:p:993-1012

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().