Event-specific earnings management: additional evidence from US M & A pre-and post-SOX

Alsharairi, M.; Dixon, R.; Al-Hamadeen, R.

Abstract

Purpose We re-examine the motivation to manage earnings in US M&As, by investigating whether the enactment of SOX has affected pre-merger earnings management. Design/methodology/approach Using a sample of over 700 completed M&As of US public firms during 1999-2008. Using quarterly reports, we track-down earnings management during the four quarters preceding the deal and consequently draw inferences about the implications of SOX on interim reporting practices. Findings Using a sample of over 700 completed M&As of US public firms during 1999-2008. Using quarterly reports, we track-down earnings management during the four quarters preceding the deal and consequently draw inferences about the implications of SOX on interim reporting practices. Originality/value Unlike what is anticipated regarding earnings management practices after SOX, the study reveals significant evidence of upward earnings management by firms engaging in M&A in post-SOX era.

Citation

Alsharairi, M., Dixon, R., & Al-Hamadeen, R. (2017). Event-specific earnings management: additional evidence from US M & A pre-and post-SOX. Journal of Financial Reporting and Accounting, 15(1), 78-98. https://doi.org/10.1108/jfra-11-2015-0097

• Journal Article Type: Article
• Acceptance Date: Jun 11, 2016
• Online Publication Date: Apr 10, 2017
• Publication Date: Apr 10, 2017
• Deposit Date: Jun 30, 2016
• Publicly Available Date: Jun 30, 2016
• Journal: Journal of Financial Reporting and Accounting
• Print ISSN: 1985-2517
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• Volume: 15
• Issue: 1
• Pages: 78-98
• DOI: https://doi.org/10.1108/jfra-11-2015-0097
• Public URL: https://durham-repository.worktribe.com/output/1401459