Abstract

The present study investigates the operating performance and the existence of earnings management for a sample of 254 Malaysian IPO companies over the period 1990-2000.  Using accrual-based measure of operating performance, this study finds strong evidence of declining performance in the IPO year and up to three years following IPOs relative to the pre-IPO period.  This finding is consistent with the results of prior studies documenting the long run underperformance of IPO companies.  The results also confirm that the decline in post-IPO operating performance is due to the existence of earnings manipulation by the IPO manager at the time of going public.

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