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Title:Private equity ownership and financial misreporting
Author(s):Wang, Shuyang
Director of Research:Li, Laura Yue
Doctoral Committee Chair(s):Li, Laura Yue
Doctoral Committee Member(s):Chen, Clara Xiaoling; Zhu, Wei; McClane, Jeremy
Department / Program:Accountancy
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Private equity
financial reporting quality
corporate governance
Abstract: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.
Issue Date:2020-04-13
Rights Information:Copyright 2020 Shuyang Wang
Date Available in IDEALS:2020-08-27
Date Deposited:2020-05

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