Manipulowanie zyskami przez spółki debiutujące na GPW

The research sample covers non-financial initial public offerings (IPOs) on the Warsaw Stock Exchange (WSE, GPW) in the period 1998-2013. The study aims to answer the question whether Polish IPO firms managed their earnings in the issuance period.Differentiated estimation models were applied and several approaches were engaged to detect accrual-based earnings management. The empirical research covered four groups of research problems: zero-profit threshold, last-year threshold, discretionary accruals and profitability consequencesfor the consecutive years.High, positive and statistically significant discretionary accruals were reported in the IPO year or before going public, along with an inclination to report a positive and higher profitability. In consequence, the deterioration in profitability was observed in the following years.Badania prowadzone były dla spółek z sektora pozafinansowego dokonujących pierwszych ofert publicznych (initial public offering, IPO), na rynku głównym Giełdy Papierów Wartościowych w Warszawie w latach 1998-2013. Celem była odpowiedź na pytanie, czy dla spółek dokonujących pierwotnych emisji akcji w Polsce zaobserwować można zjawisko zarządzania zyskami w okresach okołoemisyjnych.Badania empiryczne dotyczyły zjawiska kształtowania wyniku typu materiałowego i przeprowadzono je, wykorzystując różnorodne podejścia i kilku modeli estymacji przesunięć międzyokresowych. Podjęto cztery grupy problemów badawczych – badano skłonność do przekraczania zysku zerowego, skłonność do przekraczania rentowności roku poprzedniego, manipulowanie zyskami poprzez dokonywanie nietypowych przesunięć międzyokresowych oraz konsekwencje manipulowania zyskami dla kolejnych okresów sprawozdawczych.W roku debiutu giełdowego zaobserwowano relatywne zwiększenie poziomu nietypowych przesunięć międzyokresowych (discretionary accruals), czemu towarzyszyło nasilenie skłonności do wykazywania zysku przynajmniej na poziomie roku poprzedniego i skłonności do raportowania dodatniego wyniku finansowego. Konsekwencją nietypowych korekt w roku IPO było osłabienie rentowności w okresie bezpośrednio po debiucie

REASSESSING POLISH IPO UNDERPRICING AND UNDERPERFORMANCE

The purpose of the research was to assess the price behavior of initial public offerings (IPO) of equities listed on the Warsaw Stock Exchange from 1996 to 2010. We also aimed to observe IPO underpricing and the underperformance phenomenon with different approaches. Short-term performance was analyzed with raw and adjusted initial returns. For the long-term, abnormal returns were compounded and cumulated. Different methods of outliers detection and ways of minimizing the detrimental effect of outliers were applied. In long-term studies, we also compared the results for the daily, weekly and monthly returns. IPO underpricing and underperformance on the WSE still remains substantial and significant, even accounting for the variety of methods applied. The difference in underpricing between the 1996–2004 and the 2005–2010 sample was insignificant. However, we reported statistically significant and economically important differences in underperformance between both samples

DOES TIMING MATTER FOR THE DETERMINANTS OF IPO SHORT-TERM RETURNS? EVIDENCE FROM THE TOP EMERGING MARKETS

The study examined the short-term price behavior of initial public offerings (IPOs) of equities listed on the top emerging market exchanges during the period from 2005 to 2012. We investigated whether underpricing could be explained with models based on stakeholder rationality and those concerning behavioral factors. There were extremely high initial, two- and four-week returns in the three top emerging markets during the sample period. The results documented the existence of significant differences in IPO short-term returns between initial equity issues offered in hot- versus cold-and-neutral markets. It was also found that the amount of money left on the table during initial public offerings was related most to the uncertainty, signaling and timing proxies. The study showed that the explanations for high initial returns were, to some extent, influenced by IPO timing

RATIONALE FOR USING ASSET SECURITISATION AS A COMPANY FUNDING SOURCE

The paper presents securitisation technology as a source of capital. Securitisation can be defined as a process of converting cash flows arising from underlying assets due to the originator into a smooth repayment stream, thus enabling the originator to raise asset-backed financing (funds). Deals are normally structured by a transfer of receivables from the originator to a newly established company known as a special purpose vehicle, designed to separate the receivables from the insolvency risk of the originator, and referred to as a “true sale”. In the US, securitisation is stable and mature. In Europe, the securitisation market is growing rapidly, and in Poland it is still at an early stage of development, having to cope with number of obstacles including legal and tax issues that hamper securitisation of all asset classes. The rationale for securitisation varies widely from company to company. One of the most frequently cited reasons for undertaking securitisation is a lower cost of funds, which is possible first of all because of the segregation of receivables from the insolvency risk of the originator. Another objective of securitisation may be the freeing of regulatory capital, balance sheet management, funding diversification, transfer of risk or a strategic profile. Market mechanisms in financial markets increasingly displace administrative solutions of allocating scarce capital. Securitisation facilitates disintermediation in financial markets. The use of asset securitisation is propelling the use of market mechanisms to allocate capital

POLISH LEASING MARKET DEVELOPMENT IN 1990-2001

The aim of this article is to analyze the changes on the leasing market in Poland during the period of 1990-2001. The issue is explored in different segments of this market by means of various division criteria. In the analyzed period, there was a development of the leasing market in Poland, which was connected with deep changes in quantity and quality of these services. Demand and supply processes mentioned above were related to the parallel changes in the field of macro- and microeconomic factors. Until the year of 1999, the global value of leased assets was constantly growing. Since the year 2000, a recession in the leasing market could be observed. In the given period, on the leasing market there was an increase in the demand for inexpensive, fast delivered and standard services, but at the same time specialized, complex and non-standard offers were expected. The maturation of the leasing market in Poland was also associated with growing interest in both longer primary contract terms and greater net value of assets per contact, as well as with the development of lease contracts concerning real estate. The fluctuating popularity of a variety of asset types was caused by changing conditions in the legal and economic environment. One should emphasize strong consolidation processes between leasing companies. These processes were accompanied by an escalating polarization of the market. This was also connected with the decreasing share of independent leasing companies in the market together with an increasing importance of companies controlled by banks and foreign financial companies

POLISH LEASING MARKET DEVELOPMENT IN 1990-2001

The aim of this article is to analyze the changes on the leasing market in Poland during the period of 1990-2001. The issue is explored in different segments of this market by means of various division criteria. In the analyzed period, there was a development of the leasing market in Poland, which was connected with deep changes in quantity and quality of these services. Demand and supply processes mentioned above were related to the parallel changes in the field of macro- and microeconomic factors. Until the year of 1999, the global value of leased assets was constantly growing. Since the year 2000, a recession in the leasing market could be observed. In the given period, on the leasing market there was an increase in the demand for inexpensive, fast delivered and standard services, but at the same time specialized, complex and non-standard offers were expected. The maturation of the leasing market in Poland was also associated with growing interest in both longer primary contract terms and greater net value of assets per contact, as well as with the development of lease contracts concerning real estate. The fluctuating popularity of a variety of asset types was caused by changing conditions in the legal and economic environment. One should emphasize strong consolidation processes between leasing companies. These processes were accompanied by an escalating polarization of the market. This was also connected with the decreasing share of independent leasing companies in the market together with an increasing importance of companies controlled by banks and foreign financial companies

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Companies are very important contributors to the long-term sustainable wealth of economies and society. Public companies are likely to be especially important for economic, environmental, and social development. That is why we focus on initial public offerings (IPO). Responsible external reporting relates to the long-term value of companies and influences perceptions of value by stakeholders. This study contributes to the literature not only because it concentrates on earning quality in terms of going public, but it also combines it with another market puzzle, namely, long-term value. Previous conclusions for other markets should not simply be generalized for Poland, as the country has been an emerging market with many public firms controlled by insiders, with a limited role for the equity market and quite considerable bank financing. Using a unique dataset, we find positive and significant discretionary accruals in the IPO year, which may be perceived as a sign of poor earning quality. We also show that these accruals are negatively correlated with subsequent long-term market value for IPOs made before the financial crisis. The general conclusions are robust with respect to the latest innovations in proxies for earnings management, and also to a variety of alternative specifications

Zarządzanie zyskami w czasie kryzysu finansowego COVID-19: doświadczenia Polski

This study examines the consequences of the COVID-19 turbulence on the informativeness of financial reporting. Using data from non-financial public companies in Poland, our evidence documents the evolution of accrual and real earnings management during the pandemic period. We estimate earnings quality with cross-sectional models, observing abnormal accruals, abnormal cash flow from operations, abnormal discretionary expenditures and abnormal production costs. We contribute to the debate on earnings management during financial crises. Specifically, discretionary accruals declined significantly during the crisis. This suggests companies were less eager to inflate earnings via accruals. Polish firms also seemed to be more inclined to adopt the ‘big bath’ strategy to inflate future income. Additionally, the research provides support for predictions that real earnings management gained importance during the turbulence when the total effect of boosting income through real transactions was significant. It suggests that during the COVID-19 crisis companies based their strategies more on the probability of being detected, rather than on the cost of such activities. The study adds to the debate on the qualitative characteristics of earnings as key accounting information and its importance in corporate finance, issues that cannot be overestimated from the perspective of company stakeholders.Niniejsze badanie dotyczy oceny konsekwencji zawirowań na rynku wywołanych pandemią COVID-19 dla informacyjności sprawozdawczości finansowej. Jakość zysków została oszacowana za pomocą modeli przekrojowych, umożliwiających ocenę dyskrecjonalnych korekt memoriałowych, dyskrecjonalnych operacyjnych przepływów pieniężnych, dyskrecjonalnych kosztów uznaniowych i dyskrecjonalnych kosztów produkcji. Na podstawie danych dotyczących niefinansowych spółek publicznych w Polsce wykazano ewolucję zarządzania zyskiem typu memoriałowego oraz poprzez rzeczywiste transakcje w czasie kryzysu finansowego, co istotnie poszerza dotychczasowy stan wiedzy w tej dziedzinie. W szczególności w czasie kryzysu istotny był spadek korekt memoriałowych. Można to interpretować jako osłabienie skłonności do zawyżania zysków poprzez ingerencję w proces raportowania finansowego. Spółki wydawały się również bardziej skłonne do przyjęcia strategii big bath, aby zwiększyć swoje możliwości zawyżania dochodów w przyszłości. Ponadto badania potwierdziły, że na znaczeniu zyskało zarządzanie zyskami poprzez oddziaływanie na transakcje. Sugeruje to, że w czasie kryzysu COVID-19 firmy kształtowały swoje strategie, opierając się w większym stopniu na prawdopodobieństwie wykrycia niż na kosztach takich działań. Badanie stanowi głos w dyskusji nad jakością zysków jako kluczowego elementu raportowania i nad jej znaczeniem w finansach przedsiębiorstw, które to elementy dla interesariuszy firmy są nie do przecenienia

Is Window-Dressing around Going Public Beneficial? Evidence from Poland

The informativeness of financial reports has been of a great importance to both investors and academics. Earnings are crucial for evaluating future prospects and determining company value, especially around milestone events such as initial public offerings (IPO). If investors are misled by manipulated earnings, they could pay too high a price and suffer losses in the long-term when prices adjust to real value. We provide new evidence on the relationship between earnings management and the long-term performance of IPOs as we test the issue with a methodology that has not been applied so far for issues in Poland. We use a set of proxies of earnings management and test the long-term IPO performance under several factor models (CAPM, and three extensions of the Fama-French model). Aggressive IPOs perform very poorly later and earn severe negative stock returns up to three years after going public. The difference in returns in accrual quantiles is statistically significant in almost half of methodology settings. The results seem to suggest that investors might not be able to discount pre-IPO abnormal accruals and could be overoptimistic. Once the true earnings performance is revealed over time, the market makes downward price corrections