Table 7 Real earnings management, poison...

Table 7

Real earnings management, poison pill and IPO failure

	Model 1	Model 2	Model 3	Model 4
AbnCFO	0.098
AbnCFO	(1.534)
AbnProd		0.758**
AbnProd		(2.435)
AbnDISX			0.109***
AbnDISX			(4.818)
Rm_PROXY				0.129***
Rm_PROXY				(4.032)
Abs_DA	0.066	−0.686	−0.831	−1.067
Abs_DA	(0.088)	(−0.890)	(−1.149)	(−1.337)
Poison Pill	0.526***	0.516***	0.507***	0.534***
Poison Pill	(5.019)	(4.874)	(4.816)	(5.070)
Offerprice	−0.003	−0.003	−0.003	−0.003
Offerprice	(−1.579)	(−1.364)	(−1.204)	(−1.320)
Firstday_ret	0.003	0.003	0.003	0.003
Firstday_ret	(0.937)	(0.854)	(0.878)	(0.879)
BTM	0.347**	0.289*	0.349**	0.299**
BTM	(2.369)	(1.916)	(2.326)	(1.998)
Leverage	−0.220	0.325**	−0.277	−0.257*
Leverage	(−1.554)	(2.256)	(−1.906)	(−1.786)
Logage	−0.001	0.005	0.018	0.027
Logage	(−0.018)	(0.075)	(0.262)	(0.392)
ROA	−0.753	−3.063***	−2.674***	−2.870***
ROA	(−1.368)	(−5.099)	(−4.543)	(−4.839)
Overhang	−0.000	−0.000	−0.000	−0.000
Overhang	(−0.814)	(−0.775)	(−0.729)	(−0.727)
VC_Dummy	0.154	0.100	0.066	0.108
VC_Dummy	(1.350)	(0.862)	(0.570)	(0.933)
Big4	−0.036	−0.015	−0.033	−0.048
Big4	(−0.342)	(−0.139)	(−0.311)	(−0.452)
Gross_margin	−0.189	−0.349**	−0.369**	−0.205
Gross_margin	(−1.189)	(−1.992)	(−2.097)	(−1.301)
Nidummy	0.089	−0.157	−0.182	−0.150
Nidummy	(0.592)	(−0.974)	(−1.132)	(−0.939)
Constant	1.887	2.263	2.597	2.076
Constant	(1.241)	(1.425)	(1.637)	(1.313)
Firm and year fixed effects	Yes	Yes	Yes	Yes
Wald χ²	332.49	357.42	365.60	354.89
Log pseudolikelihood	−1467.31	−1458.30	−1449.76	−1453.26
Observations	2,997	2,997	2,997	2,997
Pseudo R²	0.129	0.134	0.139	0.137

	Model 1	Model 2	Model 3	Model 4
AbnCFO	0.098
AbnCFO	(1.534)
AbnProd		0.758**
AbnProd		(2.435)
AbnDISX			0.109***
AbnDISX			(4.818)
Rm_PROXY				0.129***
Rm_PROXY				(4.032)
Abs_DA	0.066	−0.686	−0.831	−1.067
Abs_DA	(0.088)	(−0.890)	(−1.149)	(−1.337)
Poison Pill	0.526***	0.516***	0.507***	0.534***
Poison Pill	(5.019)	(4.874)	(4.816)	(5.070)
Offerprice	−0.003	−0.003	−0.003	−0.003
Offerprice	(−1.579)	(−1.364)	(−1.204)	(−1.320)
Firstday_ret	0.003	0.003	0.003	0.003
Firstday_ret	(0.937)	(0.854)	(0.878)	(0.879)
BTM	0.347**	0.289*	0.349**	0.299**
BTM	(2.369)	(1.916)	(2.326)	(1.998)
Leverage	−0.220	0.325**	−0.277	−0.257*
Leverage	(−1.554)	(2.256)	(−1.906)	(−1.786)
Logage	−0.001	0.005	0.018	0.027
Logage	(−0.018)	(0.075)	(0.262)	(0.392)
ROA	−0.753	−3.063***	−2.674***	−2.870***
ROA	(−1.368)	(−5.099)	(−4.543)	(−4.839)
Overhang	−0.000	−0.000	−0.000	−0.000
Overhang	(−0.814)	(−0.775)	(−0.729)	(−0.727)
VC_Dummy	0.154	0.100	0.066	0.108
VC_Dummy	(1.350)	(0.862)	(0.570)	(0.933)
Big4	−0.036	−0.015	−0.033	−0.048
Big4	(−0.342)	(−0.139)	(−0.311)	(−0.452)
Gross_margin	−0.189	−0.349**	−0.369**	−0.205
Gross_margin	(−1.189)	(−1.992)	(−2.097)	(−1.301)
Nidummy	0.089	−0.157	−0.182	−0.150
Nidummy	(0.592)	(−0.974)	(−1.132)	(−0.939)
Constant	1.887	2.263	2.597	2.076
Constant	(1.241)	(1.425)	(1.637)	(1.313)
Firm and year fixed effects	Yes	Yes	Yes	Yes
Wald χ²	332.49	357.42	365.60	354.89
Log pseudolikelihood	−1467.31	−1458.30	−1449.76	−1453.26
Observations	2,997	2,997	2,997	2,997
Pseudo R²	0.129	0.134	0.139	0.137

Note(s): This table reports results from regressing IPO real earnings management on IPO failure while controlling for poison pill from 1993 to 2015. Our dependent variable is a dummy variable equal to 1 if the firm failed within five years. Models 1 to 3 report the logistic regression results of from regressing AbnCFO, AbnPROD and AbnDISX on IPO failure controlling for poison pill. Model 4 presents the results from regressing the aggregate measure of real earnings management. Appendix outlines definitions and data sources for the regression variables. Robust t-statistics adjusted for clustering by firm are reported inside the parentheses

* Statistical significance at the 10% level

** Statistical significance at the 5% level

*** Statistical significance at the 1% level

Source(s): Table by authors

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