We examine managerial influence of the corporate voting process in the context of anti-takeover charter amendments. We find statistically-significant, negative abnormal accruals in the voting year. Serial correlation between the voting year's accruals and the preceedings year's accruals is negative and significant, despite that other autocorrelations are insignificant. This negative autocorrelation is driven by firms with positive abnormal accruals in the year preceding the voting year. Compared to firms proposing fair price amendments, firms proposing more restrictive amendments have more negative abnormal accruals in the voting year. Since the shareholder vote almost always takes place in the first six months of the voting year, these findings imply that managers of firms proposing anti-takeover charter amendments act opportunistically to inflate earnings by delaying income-decreasing accruals until after shareholders have voted on the amendments. Also, the findings of earnings management are primarily driven by firms with positive abnormal accruals the fiscal year before the vote. These firms tend to have low profitability.
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Hoi, Chun-Keung; Lacina, Michael; and Wollan, Patricia, "Earnings management in corporate voting: evidence from anti-takeover charter amendments" (2008). Accessed from
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