This study explores the change in earnings management and conservatism as firms transition between private and public ownership. Using a unique sample of U.S. firms, a private phase, in which firm equity is privately held while firm debt is publicly held, is compared to a public phase, in which firm equity is also publicly held. As a large portion of the firms in the sample are backed by private equity (PE) sponsors, this study analyzes separately PE-backed firms and non-PE-backed firms. Evidence consistent with upward earnings management in the year of initial public offering, downward earnings management prior to management buyouts, and upward earnings management prior to leveraged buyouts is found. The study also finds that during the public phase, firms engage in greater upward earnings management to avoid small earnings decreases and recognize losses in a more timely manner. Furthermore, this study finds evidence that PE-backed private firms engage less in upward earnings management, and recognize losses more promptly, than do non-PE-backed private firms. Results are robust for various measures and controls, and are not affected by factors such as endogenous listing status and PE financing choices.