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Does Stock for Stock M&A Exhibit Real Earnings Management?

In: Liss 2014

Author

Listed:
  • Ziqiao Zhang

    (Beijing Jiaotong University
    Luoyang Institute of Science and Technology)

  • Qiusheng Zhang

    (Beijing Jiaotong University)

Abstract

We investigate whether acquiring firms attempt to adopt real earnings management strategy to upward reported earnings in the period of M&A announcement and the effect on performance of post-M&A, based on the related data of share payment M&A affairs occurring in China’s capital market from 2008–2010. Our results demonstrate that acquiring firms overstate earnings in the period of M&A in order to improve market confidence. Meanwhile, we also find that real earnings management is one of the main reasons to explain under-performance of post M&A. It is necessary for stakeholders to realize real earnings management opportunistic behavior underlying financial statements when they evaluate acquiring firm’s value.

Suggested Citation

  • Ziqiao Zhang & Qiusheng Zhang, 2015. "Does Stock for Stock M&A Exhibit Real Earnings Management?," Springer Books, in: Zhenji Zhang & Zuojun Max Shen & Juliang Zhang & Runtong Zhang (ed.), Liss 2014, edition 127, pages 1077-1083, Springer.
    • Handle: RePEc:spr:sprchp:978-3-662-43871-8_155
    DOI: 10.1007/978-3-662-43871-8_155
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    Cited by:

    1. Roberta Arbolino & Raffaele Boffardi & Konstantinos Kounetas & Ugo Marani & Oreste Napolitano, 2024. "Are There Conditions That Can Predict When an M&A Works? The Case of Italian Listed Banks," Economies, MDPI, vol. 12(3), pages 1-33, February.

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