Journal article 30 views
M&A-Induced Shifts in Earnings Management: Evidence from US acquirers
Chuting Feng,
Tunyi Tunyi Abongeh 
,
Konstantinos Tolikas
,
Konstantinos Tolikas
International Review of Financial Analysis
Swansea University Author:
Tunyi Tunyi Abongeh
Abstract
We examine earnings management (EM) following mergers and acquisitions (M&As),focusing on firms’ choice between accrual-based earnings management (AEM) andreal earnings management (REM). Using a large sample of U.S. public acquirers,we find that firms strategically substitute AEM with REM follow...
| Published in: | International Review of Financial Analysis |
|---|---|
| Published: |
|
| 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) andreal 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 complexityand analyst scrutiny, consistent with managers favoring less transparent formsof earnings manipulation in the post-merger environment. We further show thatmanagerial and governance characteristics shape post-merger EM strategies. Firmsled by highly capable managers exhibit greater use of REM, whereas institutionalownership and female CEO leadership are associated with lower REM. In addition,firms experiencing poorer M&A performance engage more intensively in REM, suggestingthat pressure to justify acquisition outcomes influences reporting behavior.Overall, our findings highlight the important role of governance and leadership inshaping post-merger earnings management strategies and constraining opportunisticfinancial reporting during the integration period. |
|---|---|
| College: |
School of Management |