Iqbal, A. and Khan, I. and Ahmad, Z. (2009) Earnings Management around Privatizations: Evidence from Pakistan. In: Asian Finance Association 2009 International Conference, June 30 - July 3, 2009, Brisbane, Australia.
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This paper examines the incidence of earnings management around privatizations of State Owned Enterprises (SOEs) in Pakistan. The privatization program in Pakistan was initiated in 1985, albeit without any specified objectives. It was not until 1991 when Privatization Commission was established and the privatization continued with a relatively clearer agenda. Depending on the circumstances, SOEs could face both upward (such as maximizing privatization proceeds) and downward (such as to gain political favors from investors) earnings management incentives. This study uses the modified Jones model to estimate and disintegrate total accruals into discretionary and non-discretionary current and long term accruals. Using a sample of 33 privatizations over the period 1991-2005, the study shows that upward earnings management does in fact exist during pre-privatization period within both short term (current) and long term accruals. We suggest that investors should carefully evaluate the firms being privatized keeping in view the possibilities of earnings management by SOEs.
|Item Type:||Conference or workshop item (Paper)|
|Uncontrolled keywords:||Earnings management, privatizations, Pakistan, accruals|
|Subjects:||H Social Sciences|
|Divisions:||Faculties > Social Sciences > Kent Business School > Accounting and Finance|
|Depositing User:||Rebecca Stevenson|
|Date Deposited:||21 Dec 2009 11:18|
|Last Modified:||21 Dec 2009 11:18|
|Resource URI:||http://kar.kent.ac.uk/id/eprint/23530 (The current URI for this page, for reference purposes)|
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