Abstract

http://ssrn.com/abstract=1013349
 
 

References (54)



 
 

Citations (3)



 


 



Governance and Merger Accounting: Evidence from Stock Price Reactions to Purchase Versus Pooling


Francisco de Asis Martinez-Jerez


University of Notre Dame - Department of Accountancy


European Accounting Review, Vol. 16, No. 4, 2007

Abstract:     
This paper examines the effect of corporate governance on investor reactions to accounting choice in the context of accounting for business combinations. Using a sample of 324 recent stock swap acquisitions I find that, contrary to practitioners' belief that capital markets penalize purchase accounting, the opposite appears to be true; there is a negative and significant differential market reaction of approximately 4 percent for acquiring firms that announce pooling transactions. This return differential declines to negative 8 percent for firms with ineffective corporate governance. These findings are consistent with capital markets interpreting the choice of purchase accounting as a signal of management's confidence in the likelihood of a successful merger. This signal is particularly relevant when corporate governance is considered ineffective.

Number of Pages in PDF File: 41

Keywords: Corporate Governance, Business Combinations, Mergers, Pooling of Interests, Timely Loss Recognition

JEL Classification: G12, G14, G34, M41, M44

Accepted Paper Series


Download This Paper

Date posted: September 14, 2007  

Suggested Citation

Martinez-Jerez, Francisco de Asis, Governance and Merger Accounting: Evidence from Stock Price Reactions to Purchase Versus Pooling. European Accounting Review, Vol. 16, No. 4, 2007. Available at SSRN: http://ssrn.com/abstract=1013349

Contact Information

Francisco de Asis Martinez-Jerez (Contact Author)
University of Notre Dame - Department of Accountancy ( email )
Mendoza College of Business
Notre Dame, IN 46556-5646
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,270
Downloads: 506
Download Rank: 29,865
References:  54
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.250 seconds