Private equity ownership and financial misreporting

I study whether private equity (PE) ownership is associated with portfolio firms’ financial misreporting by examining the occurrence of restatements and SEC enforcement actions during the post-IPO period. Using a sample of firms that went public between 1998 and 2015, I find that PE-backed firms are more likely to issue restatements during the five-year post-IPO period than non-PE-backed firms. The restatements received by PE-backed firms are more material, i.e., having a more negative impact on net income or longer duration. Furthermore, PE-backed firms are more likely to be subject to SEC Accounting and Auditing Enforcement Releases (AAERs). Cross-sectional analyses suggest that the financial misreporting of PE-backed firms is attributable to PE firms’ pursuit of profits as well as their control over the board and executives. Overall, this paper provides new insights into the opportunistic influence of PE firms.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2020

Author dc:creator

• Wang, Shuyang

Contributors dc:contributor

• Li, Laura Yue
• Chen, Clara Xiaoling
• Zhu, Wei
• McClane, Jeremy

• Private equity
• financial reporting quality
• misreporting
• corporate governance

Statement dc:rights

• Copyright 2020 Shuyang Wang

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/108247

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/108247