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Dissertation/Thesis Abstract

Consequences of real earnings management and weak corporate governance: Evidence from cash holdings
by Greiner, Adam J., Ph.D., Florida Atlantic University, 2013, 115; 3571432
Abstract (Summary)

I examine the impact of real earnings management (REM) and corporate governance on cash holdings. Extant research documents an increase in both cash holdings and REM activity in recent years and shows that agency conflicts influence both the levels and valuations of cash holdings. Motivated by agency problems of REM and Jensen’s (1986) arguments concerning the free cash flow problem, I investigate whether opportunistic asset sales and reductions in discretionary expenditures are associated with levels and valuations of cash holdings. Prior research also shows that strong corporate governance mitigates opportunistic earnings management behavior and enhances the valuation of cash holdings. Using empirical models from prior research, I document that REM is positively associated with cash holdings, investors discount cash holdings of high REM firms, and, among high REM firms, valuations of cash holdings of weak corporate governance firms are discounted significantly lower relative to those of strong corporate governance firms. My study unites two lines of research by incorporating agency problems concerning REM with levels and valuations of cash holdings.

Indexing (document details)
Advisor: Kohlbeck, Mark
Commitee: Clemons, Roy, Thevnot, Maya, Yuhn, Ky-Hyang
School: Florida Atlantic University
Department: Accounting
School Location: United States -- Florida
Source: DAI-A 74/11(E), Dissertation Abstracts International
Subjects: Accounting
Keywords: Agency costs, Cash holdings, Corporate governance, Real earnings management
Publication Number: 3571432
ISBN: 978-1-303-22804-9
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