[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-86621-en":3,"doc-seo-86621-105":30,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":21,"is_downloadable":21,"audit_status":21,"page_count":22,"language":23,"language_code":24,"site_id":25,"html_lang":24,"table_of_contents":26,"faqs":27,"seo_title":13,"seo_description":14,"update_tm":28,"read_time":29},86621,1649267921044,"Ava Thompson","https://us-avatar.wpscdn.com/avatar/1800007509477c92dfb?_k=1782875107921204101",8,"Research & Report","Managing for the Moment: The Role of Earnings Management via Real Activities versus Accruals in Seasoned Equity Offering Valuation","The paper evaluates how earnings management through accruals manipulation (AM) and real activities manipulation (RAM) contributes to overvaluation around seasoned equity offerings (SEOs). Results show post-SEO stock underperformance is most consistently linked to RAM, especially opportunistic reductions in R&D and in selling, general, and administrative expenditures. Overvaluation is therefore more likely when managers use more opaque channels to overstate earnings. Findings also highlight managers’ greater propensity to use RAM at SEOs despite its higher long-run cost.","The Accounting Review 2016.9 1 : 559-586.  \nDownloaded from aaajournals .org by Kings College London-FWIC Journals on 0 1/27/ 19. For personal use only .  \nTHE ACCOUNTING REVIEW American Accounting Association  \nVol. 91, No. 2 DOI: 10 .2308/accr-51153  \nMarch 2016  \npp. 559–586  \nManaging for the Moment: The Role of Earnings Management via Real Activities versus Accruals in SEO  \nValuation  \nS. P. Kothari  \nMassachusetts Institute of Technology  \nNatalie Mizik  \nUniversity of Washington  \nSugata Roychowdhury  \nBoston College  \nABSTRACT: We assess the role of both accruals manipulation (AM) and real activities manipulation (RAM) in inducing overvaluation at the time of a seasoned equity offering (SEO) . Our results reveal that earnings management is most consistently and predictably linked with post-SEO stock market underperformance when it is driven by RAM;  \nin particular, the opportunistic reduction of expenditures on R&D and selling, general, and administrative activities.  \nThus, overvaluation at the time of the SEO is more likely when managers actively engage in more opaque channels to overstate earnings. Our findings are particularly relevant because managers exhibit a greater propensity for RAMat the time of SEOs, even though RAM is more costly in the long run.  \nKeywords: earnings management; discretionary accruals; real activity manipulation; seasoned equity offering;  \nSEO overvaluation; SEO return reversal; earnings management opacity.  \nJEL Classifications: G14; G31; M4; M41 .  \nI. INTRODUCTION  \nM anagement is an important source of financial information to investors. The voluminous earnings management  \nliterature demonstrates that managers misrepresent, typically positively, the firm’s financial information in the hope  \nof skewing the firm’s stock market valuation upward. The extent to which earnings management strategies succeed in misleading investors depends in part on their relative opacity, i.e., the degree to which external investors can detect and unravel earnings management. Earnings management can occur through two channels: accruals management (AM) and real activities management (RAM) . Our objective is to assess whether the market is indeed misled by earnings management in a setting characterized by considerable scrutiny of the firm’s financial statements and its operations—the seasoned equity offering (SEO) . Of particular interest is the relative opacity of real earnings management versus accruals management.  \nOur primary result is that evidence of overvaluation at the time of an SEO is robust among firms overstating earnings through real activities management, but not accruals management. Accruals management is reliably associated with negative future returns only when it is simultaneously accompanied by real activities management. Both real and accrual earnings management strategies, individually and jointly, forecast negative future operating performance. Against this backdrop, our findings suggest that investors’ ability to detect earnings management and to assess its consequence for future performance is impaired more severely when real activities are the basis for earnings management.  \nThe authors are grateful for comments from John Harry Evans III (editor), two anonymous reviewers, Amy Hutton, Robert Jacobson, Shiva Rajgopal, Ewa Sletten, Susan Shu, seminar participants at Boston College, and conference participants at the 2012 Nick Dopuch Annual Conference at Washington University in St. Louis.  \nEditor’s note: Accepted by John Harry Evans III.  \nSubmitted: January 2013  \nAccepted: May 2015  \nPublished Online: May 2015  \nThe Accounting Review 2016.9 1 : 559-586.  \nDownloaded from aaajournals .org by Kings College London-FWIC Journals on 0 1/27/ 19. For personal use only .  \n560 Kothari, Mizik, and Roychowdhury  \nIn accruals-based earnings management, managers intervene in the financial reporting process by exercising discretion and judgment regarding accounting choices. Importantly, accruals manage","cbCaimRrrc7OtRr3","https://ap.wps.com/l/cbCaimRrrc7OtRr3","pdf",270987,3,1,28,"English","en",105,"# Abstract\n# Introduction\n## Earnings management channels (AM vs. RAM)\n## Opacity and investor detection in SEO settings\n## Definitions and mechanisms of AM and RAM\n## Regulatory and detection differences between accruals and real activities","[{\"question\":\"What are the two channels of earnings management studied in the paper?\",\"answer\":\"The study distinguishes accruals manipulation (AM) within financial reporting choices from real activities manipulation (RAM) that involves altering operating and investment decisions to mislead stakeholders.\"},{\"question\":\"Which type of earnings management is more strongly linked to post-SEO stock underperformance?\",\"answer\":\"Evidence of post-SEO underperformance is most robust and predictable when earnings management is driven by real activities manipulation (RAM), not by accruals management alone.\"},{\"question\":\"Why does the paper suggest SEO overvaluation is more likely under RAM?\",\"answer\":\"RAM is portrayed as a more opaque channel for overstating earnings because GAAP-focused auditing can more readily constrain accrual-based practices, while departures in real operations do not face the same structured “acceptable” benchmark, making detection harder for investors.\"}]",1784236251,71,{"code":4,"msg":31,"data":32},"ok",{"site_id":25,"language":24,"slug":33,"title":13,"keywords":34,"description":14,"schema_data":35,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":28},"managing-for-the-moment-the-role-of-earnings-management-via-real-activities-versus-accruals-in-seasoned-equity-offering-valuation","",{"@graph":36,"@context":85},[37,53,68],{"@type":38,"itemListElement":39},"BreadcrumbList",[40,44,48,50],{"item":41,"name":42,"@type":43,"position":21},"https://docshare.wps.com","Home","ListItem",{"item":45,"name":46,"@type":43,"position":47},"https://docshare.wps.com/document/","Document",2,{"item":49,"name":12,"@type":43,"position":20},"https://docshare.wps.com/document/research-report/",{"item":51,"name":13,"@type":43,"position":52},"https://docshare.wps.com/document/managing-for-the-moment-the-role-of-earnings-management-via-real-activities-versus-accruals-in-seasoned-equity-offering-valuation/86621/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":24,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":41,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-29","2026-07-16",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"What are the two channels of earnings management studied in the paper?","Question",{"text":75,"@type":76},"The study distinguishes accruals manipulation (AM) within financial reporting choices from real activities manipulation (RAM) that involves altering operating and investment decisions to mislead stakeholders.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"Which type of earnings management is more strongly linked to post-SEO stock underperformance?",{"text":80,"@type":76},"Evidence of post-SEO underperformance is most robust and predictable when earnings management is driven by real activities manipulation (RAM), not by accruals management alone.",{"name":82,"@type":73,"acceptedAnswer":83},"Why does the paper suggest SEO overvaluation is more likely under RAM?",{"text":84,"@type":76},"RAM is portrayed as a more opaque channel for overstating earnings because GAAP-focused auditing can more readily constrain accrual-based practices, while departures in real operations do not face 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