This study analyzes the effectiveness of Modified Jones Model in detecting earnings management among the initial public offerings that are listed between 1985 -2005 in the Dhaka Stock Exchange (DSE). Prior research documented that the Modified Jones model is effective in detecting earning management in mostly developed economies. However recently an empirical research of Korean stock exchange revealed that the Modified Jones model was not effective in detecting earnings management in the context of Korea. Our findings are similar to the Korean experience. Results of our study confirmed that Modified Jones model is not effective in detecting earnings management in the context of Bangladesh. We employed the modified Jones model to detect earning management in context of Bangladesh capital market and found out that it was not found very effective as the explanatory power of the model was only about 9 percent. This study then attempted to extend the modified Jones model and found it to be very successful. The inclusion of few factors such as revenue, depreciation expenses, retirement benefit expenses, asset disposal gains/losses with the modified model was very effective in detecting earning management in the context of Bangladesh. The explanatory power of the model was increased to about 84 percent. Therefore it is concluded that the modified Jones model is not effective in gauging the extent of earnings management practiced by the IPO firms in the Bangladesh capital market. Keywords: Earning management, Modified Jones Model, Dhaka Stock Exchange 1. Introduction Studies of short run and long run behavior of returns on IPOs reveal that IPOs are underpriced in the short run, whereas in the long run the evidence is that of underperformance, i.e., negative returns accrue to the investors holding these IPOs (Balwinder Singh and RK Mittal, 2003). IPO firms can enhance their earnings by adopting discretionary accounting accrual adjustments that raise reported earnings. Over time, investors may recognize that the firms' earnings are not maintaining momentum, and hence, investors may lose their optimism, resulting in poor long run performance. Teoh et al., (1998) and Abdullah and Susanne (2004) revealed that the offering firms report significant improvements in their operating performance in the pre-offer period, which are not due to their cash flow performance. They have also recorded that an aggressive earnings management pre-offer leads to worse operating and return performance post-offer. Most of the prior studies on earnings management have focused on why firms manage earnings. Several reasons have been identified that include; income smoothing (Yoon and Miller, 2002b), ownership control (DeAngelo, 1988), equity offerings (Rangan, 1998; Teoh et al., 1998; Yoon and Miller, 2002a) and political costs (Jones, 1991). Researchers found it arduous and challenging to detect or measure earnings management. It is not possible to observe earnings management directly. Therefore, researchers have investigated two venues...

This study examines the Malaysian accretive share buybacks firms from year 2001 to 2008 to determine the relationship between the corporate governance mechanisms and accretive share buybacks, the earnings management device to meet or beat earnings per share (EPS) forecast. The regression results of this study reports the significant effect on the relationship between corporate governance and accretive share buyback. Basically, there is positive effect on the relationship between the board independence, CEO duality and board size with the accretive share buyback to meet or beat EPS forecast (MBEF). Multiple directorships and managerial ownership documents a negative relationship with accretive share buyback to MBEF. However, this study identified insignificant relationship between board meetings and accretive share buyback. Using the accretive share buyback as an earnings management proxy is a new contribution to determine the roles of corporate governance on accretive share buyback to MBEF rather a common study on accruals manipulations and corporate governance mechanisms. Keywords: Accretive Share Buyback; Corporate Governance; Earnings Management; Earnings per Share.

This paper investigates the link between investor sentiment and stock returns in emerging

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Over the years, hundreds of empirical studies have been carried out and theoretical literature written to enhance people’s knowledge towards initial public offering (IPO), IPO underpricing, IPO flipping, IPO short profit, IPO long run underperformances; yet it is arduous for people to clearly understand the various issues related to IPOs especially with different types of equities in different industries and in different markets. The degree of underpricing varies from one issue to another. The degree of underpricing in the Bangladesh capital market is rather high compared to that of other Asian and advanced stock markets. This study analyzes the levels of underpricing in IPOs and its determinants of the Chittagong Stock Exchange (CSE). Key trends in the levels of underpricing and overpricing are highlighted out on a year to year, and industry to industry basis. Out of the 117 companies that were listed in the years 1995 to 2005, 102 (87.18%) IPOs were found to be underpriced, 13 (11.11%) overpriced while only 2 were accurately priced. The overall level of overpricing was 15.37% with a standard deviation of 18.89. Regression Analysis shows that offer size, and size of the company is positively related to the degree of underpricing. The industry type and age of the firm are found to be negatively related to the degree of underpricing. However timing of offer was found to have no significant influence on the degree of underpricing of IPOs in the Chittagong Stock Exchange.