Table 9 Real earnings management, poison...

Table 9

Real earnings management, poison pill and IPO failure

	High-/low-growth firms		High-/low-tech firms		High/Low PMC
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
Rm_proxy	1.626***	0.126**	1.505***	0.928*	1.625***	0.300
Rm_proxy	(3.236)	(2.023)	(2.702)	(1.789)	(3.079)	(0.542)
Abs_DA	−1.252	0.591	−1.551	0.391	0.488	−2.834***
Abs_DA	(−1.220)	(0.389)	(−1.319)	(0.279)	(0.600)	(−2.580)
Poison Pill	0.465***	0.498**	0.450***	0.445**	0.291*	0.642***
Poison Pill	(2.947)	(2.487)	(2.817)	(2.375)	(1.854)	(3.853)
Offerprice	−0.005*	−0.006	−0.005*	−0.006	−0.017***	0.000
Offerprice	(−1.924)	(−1.295)	(−1.921)	(−1.571)	(−3.613)	(0.094)
Firstday_ret	0.005	−0.010	0.008**	−0.036***	0.012**	−0.001
Firstday_ret	(1.625)	(−0.680)	(2.080)	(−3.137)	(2.265)	(−0.183)
BTM	0.333	0.348	0.541*	0.309	0.576***	0.093
BTM	(1.195)	(1.515)	(1.800)	(1.460)	(2.636)	(0.327)
Leverage	0.277	−1.102***	0.238	−1.099***	−0.610**	0.020
Leverage	(1.287)	(−3.869)	(1.043)	(-4.097)	(−2.419)	(0.088)
Logage	0.078	−0.097	0.149	−0.051	0.447***	−0.233**
Logage	(0.665)	(−0.892)	(1.096)	(−0.512)	(4.202)	(−2.101)
ROA	−2.225***	−0.682	−1.868**	−2.218*	−2.536**	−3.712***
ROA	(−2.782)	(−0.506)	(−2.249)	(−1.753)	(−2.474)	(−4.141)
Overhang	−0.000*	−0.000**	−0.000*	−0.000**	−0.000***	−0.000*
Overhang	(−1.730)	(−2.295)	(−1.802)	(−2.467)	(−3.120)	(−1.883)
VC_Dummy	0.275	−0.125	0.342*	−0.285	0.054	0.412**
VC_Dummy	(1.503)	(−0.581)	(1.789)	(−1.413)	(0.260)	(2.448)
Big4	0.129	0.001	0.044	−0.096	0.003	−0.138
Big4	(0.824)	(0.004)	(0.277)	(−0.482)	(0.016)	(−0.884)
Gross_margin	−0.938***	0.674*	−0.844**	0.135	−0.498**	−0.772**
Gross_margin	(−2.866)	(1.751)	(−2.491)	(0.380)	(−2.220)	(−2.132)
Nidummy	−0.184	0.067	−0.035	−0.127	0.041	−0.236
Nidummy	(−0.859)	(0.228)	(−0.157)	(−0.460)	(0.154)	(−1.018)
Constant	4.051**	0.403	−4.031***	0.791	−4.559***	−0.839
Constant	(2.073)	(0.156)	(−4.200)	(0.426)	(−3.849)	(−0.894)
Firm and year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Wald χ²	236.51	293.04	173.35	338.29	278.56	175.76
Log pseudolikelihood	−687.15	−568.73	−621.70	−641.35	−630.97	−669.94
Observations	1,390	1,464	1,230	1,643	1,457	1,404
Pseudo R²	0.174	0.238	0.156	0.247	0.240	0.165

	High-/low-growth firms		High-/low-tech firms		High/Low PMC
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
Rm_proxy	1.626***	0.126**	1.505***	0.928*	1.625***	0.300
Rm_proxy	(3.236)	(2.023)	(2.702)	(1.789)	(3.079)	(0.542)
Abs_DA	−1.252	0.591	−1.551	0.391	0.488	−2.834***
Abs_DA	(−1.220)	(0.389)	(−1.319)	(0.279)	(0.600)	(−2.580)
Poison Pill	0.465***	0.498**	0.450***	0.445**	0.291*	0.642***
Poison Pill	(2.947)	(2.487)	(2.817)	(2.375)	(1.854)	(3.853)
Offerprice	−0.005*	−0.006	−0.005*	−0.006	−0.017***	0.000
Offerprice	(−1.924)	(−1.295)	(−1.921)	(−1.571)	(−3.613)	(0.094)
Firstday_ret	0.005	−0.010	0.008**	−0.036***	0.012**	−0.001
Firstday_ret	(1.625)	(−0.680)	(2.080)	(−3.137)	(2.265)	(−0.183)
BTM	0.333	0.348	0.541*	0.309	0.576***	0.093
BTM	(1.195)	(1.515)	(1.800)	(1.460)	(2.636)	(0.327)
Leverage	0.277	−1.102***	0.238	−1.099***	−0.610**	0.020
Leverage	(1.287)	(−3.869)	(1.043)	(-4.097)	(−2.419)	(0.088)
Logage	0.078	−0.097	0.149	−0.051	0.447***	−0.233**
Logage	(0.665)	(−0.892)	(1.096)	(−0.512)	(4.202)	(−2.101)
ROA	−2.225***	−0.682	−1.868**	−2.218*	−2.536**	−3.712***
ROA	(−2.782)	(−0.506)	(−2.249)	(−1.753)	(−2.474)	(−4.141)
Overhang	−0.000*	−0.000**	−0.000*	−0.000**	−0.000***	−0.000*
Overhang	(−1.730)	(−2.295)	(−1.802)	(−2.467)	(−3.120)	(−1.883)
VC_Dummy	0.275	−0.125	0.342*	−0.285	0.054	0.412**
VC_Dummy	(1.503)	(−0.581)	(1.789)	(−1.413)	(0.260)	(2.448)
Big4	0.129	0.001	0.044	−0.096	0.003	−0.138
Big4	(0.824)	(0.004)	(0.277)	(−0.482)	(0.016)	(−0.884)
Gross_margin	−0.938***	0.674*	−0.844**	0.135	−0.498**	−0.772**
Gross_margin	(−2.866)	(1.751)	(−2.491)	(0.380)	(−2.220)	(−2.132)
Nidummy	−0.184	0.067	−0.035	−0.127	0.041	−0.236
Nidummy	(−0.859)	(0.228)	(−0.157)	(−0.460)	(0.154)	(−1.018)
Constant	4.051**	0.403	−4.031***	0.791	−4.559***	−0.839
Constant	(2.073)	(0.156)	(−4.200)	(0.426)	(−3.849)	(−0.894)
Firm and year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Wald χ²	236.51	293.04	173.35	338.29	278.56	175.76
Log pseudolikelihood	−687.15	−568.73	−621.70	−641.35	−630.97	−669.94
Observations	1,390	1,464	1,230	1,643	1,457	1,404
Pseudo R²	0.174	0.238	0.156	0.247	0.240	0.165

Note(s): The table reports the results of logistic regression for high- and low-growth firms (models 1 and 2), high- and low-tech firms (Models 3and 4) and high and low product market competition (models 5 and 6) for the whole sample over the period 1993-2015. H.G. is a dummy variable equal to 1 if the average market-to-book ratio over the entire sample period is above the sample median; otherwise, 0. High tech/low tech is a dummy variable that takes 1 if the ratio of R&D to sales is greater than 0.05. Product market competition is measured as (−1) times Herfindahl–Hirschman Index (Hj) computed as the sum of squared market shares of all firms on Compustat in an industry based on a three-digit SIC code. Market share is calculated based on the ratio of the firm i's sales to the industry j's total sales. High PMC (product market competition) is a dummy variable equal to 1 if the Herfindahl–Hirschman Index is above the median; otherwise, 0. Appendix outlines definitions and data sources for the regression variables. Robust t-statistics adjusted for clustering by the 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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