This study examines the earnings management behaviour of 455 distressed US firms that filed for bankruptcy during the … stock returns. Our results are consistent with downwards earnings management 1 year prior to the bankruptcy-filing. Results … also show that (a) firms receiving unqualified audit opinions 4 or 5 years prior to the bankruptcy-filing event manage …

-backed companies do not suffer from higher bankruptcy rates than non-buyout companies. In fact, when companies are backed by … experienced private equity funds, their bankruptcy rates are even lower. Experienced investors seem to be better able to manage …