Tunyi, A. orcid.org/0000-0002-5761-931X, Yang, J., Agyei-Boapeah, H. et al. (1 more author) (2022) Takeover vulnerability and pre-emptive earnings management. European Accounting Review, 33 (2). pp. 677-711. ISSN 0963-8180
Abstract
We explore whether firms that are vulnerable to takeovers pre-emptively manage earnings in anticipation of such events. We find a positive relationship between firms' vulnerability to takeovers and their propensity to manage earnings, mainly through the manipulation of real activities. We consider two motivations for firms' pre-emptive earnings management behavior; (1) to deter future takeovers and (2) to optimize M&A outcomes. Concerning the former, we document evidence consistent with entrenched managers using real earnings management to deter or delay future takeovers. Concerning the latter, we find evidence suggesting that, contingent on receiving takeover bids, vulnerable firms that pre-emptively manipulate real activities extract comparatively higher merger premiums. Overall, our findings suggest that managers of vulnerable firms pre-emptively manage earnings to purposefully delay the timing and optimize the outcomes of prospective takeovers.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2022 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. |
Keywords: | Takeovers; Takeover vulnerability; Earnings management; Takeover deterrent; Merger premiums |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 17 Aug 2022 10:25 |
Last Modified: | 17 Jul 2024 09:45 |
Status: | Published |
Publisher: | Taylor & Francis (Routledge) |
Refereed: | Yes |
Identification Number: | 10.1080/09638180.2022.2116064 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:189878 |
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