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M&A-induced shifts in earnings management: Evidence from US acquirers
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Tunyi Tunyi Abongeh ,
Konstantinos Tolikas
International Review of Financial Analysis, Volume: 117, Start page: 105253
Swansea University Author:
Tunyi Tunyi Abongeh
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DOI (Published version): 10.1016/j.irfa.2026.105253
Abstract
We examine earnings management (EM) following mergers and acquisitions (M&As), focusing on firms’ choice between accrual-based earnings management (AEM) and real earnings management (REM). Using a large sample of U.S. public acquirers, we find that firms strategically substitute AEM with REM fol...
| Published in: | International Review of Financial Analysis |
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| ISSN: | 1057-5219 1873-8079 |
| Published: |
Elsevier BV
2026
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| Online Access: |
Check full text
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa72018 |
| Abstract: |
We examine earnings management (EM) following mergers and acquisitions (M&As), focusing on firms’ choice between accrual-based earnings management (AEM) and real earnings management (REM). Using a large sample of U.S. public acquirers, we find that firms strategically substitute AEM with REM following M&A completion. This shift is more pronounced among firms facing greater business complexity and analyst scrutiny, consistent with managers favoring less transparent forms of earnings manipulation in the post-merger environment. We further show that managerial and governance characteristics shape post-merger EM strategies. Firms led by highly capable managers exhibit greater use of REM, whereas institutional ownership and female CEO leadership are associated with lower REM. In addition, firms experiencing poorer M&A performance engage more intensively in REM, suggesting that pressure to justify acquisition outcomes influences reporting behavior. Overall, our findings highlight the important role of governance and leadership in shaping post-merger earnings management strategies and constraining opportunistic financial reporting during the integration period. |
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| Keywords: |
Accrual earnings management; Real earnings management; Mergers & acquisitions; Business complexity; Analyst scrutiny; Internal governance |
| College: |
Faculty of Humanities and Social Sciences |
| Start Page: |
105253 |