FINANCIAL MANIPULATION IN SEASONED EQUITY OFFERINGS: EVIDENCE FROM TURKEY

Year 2018, Volume: 5 Issue: 3, 268 - 287, 30.09.2018

Mustafa Cikrikci , Mustafa Ozyesil

Abstract

Purpose- This study aims to search whether financial
manipulation practices was performed on Seasoned Equity Offerings (seos) by 41
firms in Borsa Istanbul for the 2010-2015 period.   

Methodology- Probit analysis and Beneish (1999) model were
used in the study. 9 financial ratios were used as independent variables in the
probit model in order to find out wheter the firms make manipulation through
these ratios. For the purpose of estimating sample firms’ tendency for manipulation
clustering analysis was also used. Manipulation possibilities were calculated
for each firms. Finally based on average index values, firms were grouped as a
having high and low manipulation tendency.

Findings- In the model, based on an event study
conducted via the bulletins and reports of BIST and SPK, 20 firms were
considered as manipulator while the remaining considered as control firms. It
was observed that most of manipulation techniques (%89) were made in order to
increase period profit.

Conclusion- It has been confirmed that firms that
conducted seos applied the financial manipulation techniques during the
analysis period. 3 independent variables include Asset Quality Index,
Inventories / Net Sales Index and Total Accruals / Total Assets index were
found to be statistically significant in determining whether firms apply
financial manipulation. Based on the robustness test, the model’s estimating
power was calculated as %70.23. According to the model’s reliability test, 11
firms were found as a having high manipulation tendency. This finding refers
success rate for estimating manipulator firms in our model is % 55
(11/20).  

Keywords

Financial manipulation, seasoned equity offering, beneish model, probit analysis

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