Do Acquirers Manage Earnings Prior to a Share for Share Bid?
Article first published online: 28 JUN 2008
© 2008 The Authors Journal compilation © 2008 Blackwell Publishing Ltd
Journal of Business Finance & Accounting
Volume 35, Issue 5-6, pages 633–670, June/July 2008
How to Cite
Botsari, A. and Meeks, G. (2008), Do Acquirers Manage Earnings Prior to a Share for Share Bid?. Journal of Business Finance & Accounting, 35: 633–670. doi: 10.1111/j.1468-5957.2008.02091.x
- Issue published online: 28 JUN 2008
- Article first published online: 28 JUN 2008
- mergers and acquisitions;
- earnings management;
- share for share bids;
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.