（節(jié)選）外文翻譯---財(cái)務(wù)報(bào)告和矛盾的管理動(dòng)機(jī)管理層收購(gòu)案例（英文）

1、MANAGEMENT SCIENCEVol. 54, No. 10, October 2008, pp. 1700–1714 issn 0025-1909?eissn 1526-5501?08?5410?1700informs ®doi 10.1287/mnsc.1080.0895 © 2008 INFORMSFinancial Reporting and Conflicting Managerial Incenti

2、ves: The Case of Management BuyoutsPaul E. Fischer, Henock LouisAccounting Department, Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802 {pef5@psu.edu, hul4@psu.edu}W e analyze

3、 the effect of external financing concerns on managers’ financial reporting behavior prior to management buyouts (MBOs). Prior studies hypothesize that managers intending to undertake an MBO have an incentive to manage e

4、arnings downward to reduce the purchase price. We hypothesize that managers also face a conflicting reporting incentive associated with their efforts to obtain external financing for the MBO and to lower their financing

5、cost. Consistent with our hypothesis, we find that managers who rely the most on external funds to finance their MBOs tend to report less negative abnormal accrual prior to the MBOs. In addition, the relation between ext

6、ernal financing and abnormal accruals is tempered when there are more fixed assets that can serve as collateral for debt financing.Key words: MBO; earnings management; debt financing; managerial incentives History: Accep

7、ted by Stefan Reichelstein, accounting; received June 16, 2007. This paper was with the authors 2 months for 1 revision. Published online in Articles in Advance September 5, 2008.1. Introduction Prior studies suggest tha

8、t firms manage earnings prior to corporate events such as management buy- outs (MBOs) (Perry and Williams 1994), seasoned public offerings (Teoh et al. 1998, Shivakumar 2000), stock-for-stock mergers (Erickson and Wang 1

9、999, Louis 2004), reverse leverage buyouts (Chou et al. 2006), open-market repurchases (Gong et al. 2008), and Dutch-auction tender offers (Louis and White 2007). These studies generally focus on managers’ incentives to

10、use reporting discretion to influence equity market investors. There is little consideration in the literature, however, for the presence of report- ing incentives that conflict with the incentives to influ- ence equity

11、market investors. We analyze the effect of external financing con- siderations on managers’ financial reporting behavior prior to MBOs. Our interest in MBOs is heightened by the resurgence in MBO activities starting with

12、 the late 1990s and managers’ renewed interest in MBOs due partly to the desire to avoid the compliance costs associated with the Sarbanes-Oxley Act (Engel et al. 2007). We are also interested in the MBO setting because

13、extant studies on earnings management prior to MBOs yield mixed results. DeAngelo (1986) finds no evidence of earnings management prior to MBOs, whereas Perry and Williams (1994) report evidence consistent with downward

14、earnings management. By controlling for external financing incentives, we may be able to provide clearer evidence that managers respond to equity market incentives. Nonetheless, ourmain motivation for choosing the MBO se

15、tting is the potential conflicting financial reporting incentive associated with external financing considerations. Managers planning to undertake an MBO want to purchase their firms’ equity at as low a price as pos- sib

16、le. Consequently, previous studies hypothesize that managers have an incentive to release less favorable earnings reports to equity market participants prior to an MBO in an attempt to reduce the MBO pur- chase price (e.

17、g., Perry and Williams 1994). We con- sider the possibility that managers have a conflicting earnings management incentive prior to MBOs that is attributable to external financing concerns, which are thought to be substa

18、ntial (see, e.g., Osborn 1984, Kos- man 1998, Tran 2000). In the framework we employ for our analysis, the financing-related reporting incen- tive is driven by management’s concerns regarding their ability to obtain MBO

19、financing from exter- nal parties and their desire to obtain that financing at a favorable cost. The financing incentive conflicts with the equity market incentive because the financ- ing incentive suggests that managers

20、 should man- age earnings upward. Consequently, to the extent that an external financing incentive exists, we expect it to temper the equity market incentive. Based on our framework, we hypothesize that financing- relate

21、d earnings management incentives are more pronounced when the funds needed to execute the buyout must be raised to a greater extent from exter- nal parties. In addition, we hypothesize that the increase in financing-rela

22、ted incentives arising from1700Fischer and Louis: Financial Reporting and Conflicting Managerial Incentives: The Case of Management Buyouts 1702 Management Science 54(10), pp. 1700–1714, © 2008 INFORMS??r/2?m2, wher

23、e ?r > 0. Consistent with prior earnings management studies, we use a quadratic cost function because it permits a simple closed-form equilibrium characterization of the manager’s earnings manage- ment strategy (see F

24、ischer and Verrecchia 2000, Dye and Sridhar 2004). To execute the MBO, the manager must have funds to purchase the equity he does not already own and pay for existing senior claims that must be settled. Let P be the fund

25、s required to execute the MBO. We assume P = ? + ?e?r ? ? me?, where ? > 0 repre- sents the payment required to settle senior claims plus any intercept term in a linear pricing function for outstanding equity, ?e repr

26、esents the sensitivity of the equity market price to equity market partici- pant beliefs about unmanaged earnings, ?e > 0, and ? me is the equity market participants’ beliefs about the manager’s earnings management ch

27、oice. Hence, the linear function captures the idea that the equity price is an increasing linear function of the market beliefs about unmanaged earnings, which are increasing in the report and decreasing in the market be

28、liefs about the manager’s earnings management. The manager expects to raise f ≥ 0 funds from external sources, with the remaining funds coming from the MBO group, which includes the manager. The incremental cost of the e

29、xternally raised funds is a decreasing function of the manager’s earnings report, where the sensitivity of the cost to the earn- ings report is decreasing in the level of the target firm’s fixed assets, a, that can be em

30、ployed as col- lateral. Formally, the incremental cost per unit of the external financing, R, is [?f ? ?f ?a??r ? ? mf ?], where ?f > 0, ?f ?a? > 0, ?? f ?a? 0. If we impose the standard requirement that the equit

31、y and external financing market have ratio- nal expectations in equilibrium, we can completely characterize an equilibrium level of earnings man- agement, m?. In a rational expectations equilibrium, ? mf = ? me = m?, and

32、 m? is optimal for the manager given that ? mf = ? me = m? (i.e., Equation (2) must be satisfied). Hence, it follows that m? must satisfy Equa- tion (2) after substituting in m? for all ? mf , ? me, and m. Substituting i

33、n m? into Equation (2) and rearranging yields the rational expectations equilibrium m?:m? = ??e + ?f ?a?f?r ? (3)In summary, then, equity market and external financ- ing market participants anticipate that the manager wi