Empirical evidence of an incentive problem and related earnings management in cable television public limited partnerships.

摘要

Cable television public limited partnerships are empirically examined for evidence of an incentive problem when managers purchase cable television systems from the partnerships and for evidence of earnings management in the partnerships preceding cable system sales. Results are consistent with the notions that managerial self-interest dominates a fiduciary duty to owners in this incentive setting and that managers manage earnings preceding their purchase of cable television systems.; Empirical evidence shows that cable television systems acquired by managers are at significantly lower prices than sales of cable television systems to unaffiliated third parties. Additionally, cable television systems acquired by managers that are geographically proximate to systems already owned by managers are shown to command higher prices. Ownership votes preceding cable television system sales to managers are examined and found not to be significantly associated with cable television system sale prices. Potential alternative explanations for the empirical results are explored and rejected.; Earnings management through the use of discretionary accruals is examined, as well as, “real” earnings management through an examination of changes in investment and operating expenses, and pricing of cable television services to customers. Discretionary accruals are found to be negatively associated with the purchase of cable television systems by managers, while investment and operating expenses are found to be positively associated with the purchase of cable television systems by managers. Evidence of lower pricing of cable services to customers preceding management purchases of cable television systems is also presented.