Acquisition, Earnings Management and Firm’s Performance: Evidence from Malaysia
Journal of Business Studies Quarterly, 2012, Vol. 4, No. 1, pp. 91-110
20 Pages Posted: 16 Sep 2012
Date Written: 2012
This paper examined the relationship between earnings management and performance of acquiring firms in Malaysia during period of 2004-2010. Earnings management measured by discretionary accruals derived from modified Jones model and firm’s performance estimated by monthly Cumulative Abnormal Return. Firms are selected from both listed cash and share acquirers firms on Bursa Malaysia in the period of 2004-2010. The results indicated that share acquirer firms unlike cash acquirers manipulated their earnings preceding acquisition announcement date. Furthermore, the presented a negative relationship between earnings management preceding and performance of firms following the acquisition date for share acquirer firms.
Keywords: Earnings Management, Mergers and Acquisitions, Jones Model, Total Accruals, Discretionary Accruals, Cumulative Abnormal Return, Firm’s Performance
JEL Classification: M41, G3, P34, P43
Suggested Citation: Suggested Citation