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Do Acquirers Manage Earnings Prior to a Share for Share Bid?

Do Acquirers Manage Earnings Prior to a Share for Share Bid? Abstract: Earnings management by acquirers ahead of share for share bids may affect whether a bid succeeds, and hence which management team controls the target's assets, as well as the distribution of gains between target and acquirer shareholders. This paper tests for such earnings management for the UK, the world's second largest takeover market, in the period 1997–2001 when M&A reached record levels and share for share deals came to account for the majority of expenditure. Using a range of approaches originating in Jones' model, the paper finds evidence consistent with earnings management ahead of share‐financed bids. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Finance & Accounting Wiley

Do Acquirers Manage Earnings Prior to a Share for Share Bid?

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References (112)

Publisher
Wiley
Copyright
© 2008 The Authors Journal compilation © 2008 Blackwell Publishing Ltd
ISSN
0306-686X
eISSN
1468-5957
DOI
10.1111/j.1468-5957.2008.02091.x
Publisher site
See Article on Publisher Site

Abstract

Abstract: Earnings management by acquirers ahead of share for share bids may affect whether a bid succeeds, and hence which management team controls the target's assets, as well as the distribution of gains between target and acquirer shareholders. This paper tests for such earnings management for the UK, the world's second largest takeover market, in the period 1997–2001 when M&A reached record levels and share for share deals came to account for the majority of expenditure. Using a range of approaches originating in Jones' model, the paper finds evidence consistent with earnings management ahead of share‐financed bids.

Journal

Journal of Business Finance & AccountingWiley

Published: Jun 1, 2008

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