The effect of target-firm accounting quality on valuation in acquisitions

• 成果类型: Article
• 署名作者: McNichols, Maureen F.; Stubben, Stephen R.
• 署名单位: Stanford University; Utah System of Higher Education; University of Utah
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-014-9283-x
• 发表日期: 2015
• 页码: 110-140
• 关键词: earnings management; INFORMATION UNCERTAINTY; AGENCY COSTS; accruals; performance; STOCK; INVESTMENT; asymmetry

摘要

We examine whether acquisitions are more profitable for acquirers when the firms they target disclose higher-quality accounting information. If accounting information reduces uncertainty in the value of the target firm by facilitating a more precise valuation, we predict that managers of the acquiring firm can bid more effectively and pay less to acquire a target firm that has high-quality accounting information. Using a large sample of acquisitions of public firms from 1990 to 2010, we find evidence consistent with our prediction. Specifically, when target firms have higher-quality accounting information, acquirer returns around the acquisition announcement are higher and target returns are lower-consistent with acquirers capturing a greater portion of acquisition gains by paying less for target firms. These findings, which are robust to a variety of controls and alternative measures of uncertainty and accounting quality, suggest that higher-quality accounting information leads to better bidding decisions in acquisitions.