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M&A-induced shifts in earnings management: Evidence from US acquirers

Chuting Feng Orcid Logo, Tunyi Tunyi Abongeh Orcid Logo, Konstantinos Tolikas Orcid Logo

International Review of Financial Analysis, Volume: 117, Start page: 105253

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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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...

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Published in: International Review of Financial Analysis
ISSN: 1057-5219 1873-8079
Published: Elsevier BV 2026
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URI: https://cronfa.swan.ac.uk/Record/cronfa72018
first_indexed 2026-06-06T12:09:48Z
last_indexed 2026-06-17T04:34:12Z
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spelling 2026-06-16T15:01:33.8155698 v2 72018 2026-06-06 M&A-induced shifts in earnings management: Evidence from US acquirers eefe2792c8eed5b49feede33981dfa53 0000-0002-5761-931X Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2026-06-06 CBAE 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. Journal Article International Review of Financial Analysis 117 105253 Elsevier BV 1057-5219 1873-8079 Accrual earnings management; Real earnings management; Mergers &amp; acquisitions; Business complexity; Analyst scrutiny; Internal governance 1 9 2026 2026-09-01 10.1016/j.irfa.2026.105253 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Not Required 2026-06-16T15:01:33.8155698 2026-06-06T13:03:46.9449271 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Chuting Feng 0000-0003-3085-4173 1 Tunyi Tunyi Abongeh 0000-0002-5761-931X 2 Konstantinos Tolikas 0000-0001-8281-0709 3 72018__36981__d115ff917ab14cf29731171a55c68da0.pdf 72018.AAM.pdf 2026-06-16T14:59:13.8165145 Output 651853 application/pdf Accepted Manuscript true Author accepted manuscript document released under the terms of a Creative Commons CC-BY licence using the Swansea University Research Publications Policy (rights retention). true eng https://creativecommons.org/licenses/by/4.0/
title M&A-induced shifts in earnings management: Evidence from US acquirers
spellingShingle M&A-induced shifts in earnings management: Evidence from US acquirers
Tunyi Tunyi Abongeh
title_short M&A-induced shifts in earnings management: Evidence from US acquirers
title_full M&A-induced shifts in earnings management: Evidence from US acquirers
title_fullStr M&A-induced shifts in earnings management: Evidence from US acquirers
title_full_unstemmed M&A-induced shifts in earnings management: Evidence from US acquirers
title_sort M&A-induced shifts in earnings management: Evidence from US acquirers
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Chuting Feng
Tunyi Tunyi Abongeh
Konstantinos Tolikas
format Journal article
container_title International Review of Financial Analysis
container_volume 117
container_start_page 105253
publishDate 2026
institution Swansea University
issn 1057-5219
1873-8079
doi_str_mv 10.1016/j.irfa.2026.105253
publisher Elsevier BV
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
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description 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.
published_date 2026-09-01T06:50:56Z
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