Does Investment-Related Pressure Lead to Misreporting? An Analysis of Reporting Following M&A Transactions

• 成果类型: Article
• 署名作者: Bens, Daniel A.; Goodman, Theodore H.; Neamtiu, Monica
• 署名单位: University of Arizona
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-10210
• 发表日期: 2012
• 页码: 839-865
• 关键词: CEO TURNOVER; earnings management; AGENCY COSTS; performance; COMPENSATION; INFORMATION; FRAUD; FIRMS; acquisitions; statements

摘要

This study examines whether managers alter their financial reporting decisions in the face of investment-related pressure. We define investment-related pressure as the increased pressure managers feel to retain their job following an M&A poorly received by the market. We hypothesize that managers attempt to assuage pressure by delivering strong performance post-merger, creating incentives for misreporting. Our findings indicate that acquirers with more negative M&A announcement returns are more likely to misstate financial statements in the post-investment period and the issuance of misstated financials mitigates this pressure, at least in the near term. Our study contributes to the literature on the relation between corporate investing and financial reporting by showing how investment-related pressure leads to misreporting, even in a setting where the costs (e.g., greater probability of detection) are high. Our study also has implications for the large body of research that evaluates various consequences of M&As using post-merger performance. Specifically, researchers should be careful to distinguish real from misstated financial performance in the post-investment period.