Earnings Management through Transaction Structuring: Contingent Convertible Debt and Diluted Earnings per Share
研究企业是否通过设计或有可转换债券（COCOs）的结构来管理稀释每股收益，发现当传统债券会显著降低稀释每股收益时，企业更可能发行COCOs，且基于每股收益的薪酬合同也影响这一决策。
ABSTRACT In this article we examine whether firms structure their convertible bond transactions to manage diluted earnings per share (EPS). We find that the likelihood of firms issuing contingent convertible bonds (COCOs), which are often excluded from diluted EPS calculations under Statement of Financial Accounting Standard (SFAS) 128, is significantly associated with the reduction that would occur in diluted EPS if the bonds were traditionally structured. We also document that firms' use of EPS‐based compensation contracts significantly affects the likelihood of COCO issuance and find weak evidence that reputation costs, measured using earnings restatement data, play a role in the structuring decision. These results are robust to controlling for alternative motivations for issuing COCOs, including tax and dilution arguments. In addition, an examination of announcement returns reveals that investors view the net benefits and costs of COCOs as offsetting one another. Our results contribute to the literature on earnings management, diluted EPS, financial reporting costs, and financial innovation.