Earnings Management In Takeovers Of Privately Held Targets

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Earnings Management in Takeovers of Privately Held Targets

Author : Bok Baik
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Earnings Management in Takeovers of Privately Held Targets by : Bok Baik

Download or read book Earnings Management in Takeovers of Privately Held Targets written by Bok Baik and published by . This book was released on 2009 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate patterns of earnings management by the acquiring firm in a merger, considering both the form of payment and the target firm's listing status. We find that the acquiring firm is more likely to report income-increasing abnormal accruals when it uses stock to acquire a privately held target. The bidder's abnormal accruals are also higher when it acquires a privately held target operating in a different industry and when it acquires a smaller target. These results suggest that greater estimation risk in the valuation of an acquisition target motivates the bidder to avoid overpayment by manipulating earnings upward prior to the merger. We also find that for a bidder acquiring a privately held target, stock returns around the merger announcement are negatively related to the abnormal accruals, but long-term returns show no relation to the abnormal accruals. Thus, it appears that investors price the bidder's earnings management at the time of the acquisition, and we find no evidence of a delayed market reaction or price correction.

Do Targets Grab the Cash in Takeovers

Author : Domenico Campa
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Do Targets Grab the Cash in Takeovers by : Domenico Campa

Download or read book Do Targets Grab the Cash in Takeovers written by Domenico Campa and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Extant research on Mergers and Acquisitions (M&A) provides evidence that acquirers under perform subsequent to the takeover completion. Such evidence is more unequivocal for acquirers that finance the acquisition by issuing equity relative to those that use cash. Current literature recognizes various reasons for this under performance, most of which suggest overvaluation of the acquirers and/or over payment for the targets at the time of acquisition announcement. Alternatively, this paper aims to investigate whether acquirers' post takeover abnormal return is also attributed to target firms' real and/or accrual earnings management. Our results indicate that, on average, targets manage earnings upwards using real transactions rather than accruals, during the year preceding the takeover. More specifically, we find evidence of earnings management through sales among targets of cash acquisitions and that it is significantly and negatively related to the post-acquisition performance of the acquirers. These findings suggest that there is an association between the method of financing in acquisitions and earnings management in target firms, which could impact the post-takeover performance of acquirers.

Reaction to Earnings in a Takeover Environment

Author : Marie Ellen Emmendorfer Archambault
Publisher :
ISBN 13 :
Total Pages : 296 pages
Book Rating : 4.3/5 (129 download)

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Book Synopsis Reaction to Earnings in a Takeover Environment by : Marie Ellen Emmendorfer Archambault

Download or read book Reaction to Earnings in a Takeover Environment written by Marie Ellen Emmendorfer Archambault and published by . This book was released on 1992 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Impact of Pre-Merger Earnings Management on Non-Cash Acquisition Premia

Author : Malek Alsharairi
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Impact of Pre-Merger Earnings Management on Non-Cash Acquisition Premia by : Malek Alsharairi

Download or read book The Impact of Pre-Merger Earnings Management on Non-Cash Acquisition Premia written by Malek Alsharairi and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using 1320 European mergers and acquisitions (M&As) completed between 2003 and 2012, this paper investigates patterns of earnings management and the implications for non-cash acquisition premia considering both the form of payment and the target firm's listing status. The empirical evidence documented in this study suggests that management teams engage in pre-merger upward earnings management and that it is more evident for private rather than for publicly listed targets in order to compensate for the higher information asymmetry. This earnings management procedure leads to higher takeover premia even after controlling for variables such as the acquirer's internal investment opportunities, profitability or available free cash flow.

Valuation for M&A

Author : Chris M. Mellen
Publisher : John Wiley & Sons
ISBN 13 : 0470648813
Total Pages : 343 pages
Book Rating : 4.4/5 (76 download)

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Book Synopsis Valuation for M&A by : Chris M. Mellen

Download or read book Valuation for M&A written by Chris M. Mellen and published by John Wiley & Sons. This book was released on 2010-05-11 with total page 343 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discover the tools necessary to determine what your company's value is, what drives its value, and how to enhance that value during an M&A transaction. The only book to focus on valuation specifically for mergers and acquisitions, Valuation For M&A: Building Value in Private Companies, Second Edition lays out the steps for measuring and managing value creation in privately held businesses. This groundbreaking work led directly to authors Chris M. Mellen and Franck C. Evans being named the joint 2010 AM&AA Middle Market Thought Leader of the Year by the Alliance of Merger & Acquisition Advisors, and its thorough overview of the subject: Recognizes a company as an investment and explains how to manage that value to maximize shareholder returns, focusing on returns, risks, and capital invested Explains investment or strategic value versus fair market value and provides a document request checklist; sample interview questions; and formats for adjusting financial statements, developing discount rates, the computation of net cash flow; and a valuation reconciliation form Includes a comprehensive case study to illustrate concepts and calculations Now covers fair value accounting and the impact of SFAS Nos. 141, 142, and 157 and their IFRS counterparts, intangible asset valuation techniques, exit planning, international M&As, and venture backed/early stage companies Showing corporate executives as well as M&A professionals and business appraisers how to value privately-held businesses for merger and acquisition purposes, this book helps investors, executives, and their advisors determine the optimum strategy to enhance both market value and strategic value to maximize return on investment.

Takeovers and Publicly and Privately Held Targets

Author : Chou-I. Tsai
Publisher :
ISBN 13 :
Total Pages : 162 pages
Book Rating : 4.:/5 (57 download)

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Book Synopsis Takeovers and Publicly and Privately Held Targets by : Chou-I. Tsai

Download or read book Takeovers and Publicly and Privately Held Targets written by Chou-I. Tsai and published by . This book was released on 2002 with total page 162 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Routledge Companion to Financial Accounting Theory

Author : Stewart Jones
Publisher : Routledge
ISBN 13 : 1135107262
Total Pages : 559 pages
Book Rating : 4.1/5 (351 download)

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Book Synopsis The Routledge Companion to Financial Accounting Theory by : Stewart Jones

Download or read book The Routledge Companion to Financial Accounting Theory written by Stewart Jones and published by Routledge. This book was released on 2015-05-22 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial accounting theory has numerous practical applications and policy implications, for instance, international accounting standard setters are increasingly relying on theoretical accounting concepts in the creation of new standards; and corporate regulators are increasingly turning to various conceptual frameworks of accounting to guide regulation and the interpretation of accounting practices. The global financial crisis has also led to a new found appreciation of the social, economic and political importance of accounting concepts generally and corporate financial reporting in particular. For instance, the fundamentals of capital market theory (i.e. market efficiency) and measurement theory (i.e. fair value) have received widespread public and regulatory attention. This comprehensive, authoritative volume provides a prestige reference work which offers students, academics, regulators and practitioners a valuable resource containing the current scholarship and practice in the established field of financial accounting theory.

The Equity Wealth Effects of Method of Payment in Takeover Bids for Privately Held Firms

Author : Raymond da Silva Rosa
Publisher :
ISBN 13 :
Total Pages : 23 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Equity Wealth Effects of Method of Payment in Takeover Bids for Privately Held Firms by : Raymond da Silva Rosa

Download or read book The Equity Wealth Effects of Method of Payment in Takeover Bids for Privately Held Firms written by Raymond da Silva Rosa and published by . This book was released on 2001 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: The equity wealth effects of method of payment in takeover bids for privately held firms In takeover bids for unlisted firms, the typically more closely knit target shareholders have the bargaining power and incentive to force the bidder's managers to disclose their private information about the value of their firm's shares. The acceptance of share-based offers by private target shareholders thus conveys favourable information about the net present value of the takeover, unlike the case in share based bids for listed targets. We document that successful bids for private targets are associated with significantly positive abnormal returns to bidders over the announcement period, a result that diverges from findings based on bids for public targets. Contrary to Chang (1998), share based bids for Australian private targets are not associated with higher abnormal returns to bidders. However, most bids by listed companies for private companies are cash based and these generate a positive return. Our results are consistent with the explanation that lower competition for private targets allows acquirers to capture more of the economic rent from takeovers by offering cash bids.

Essays on Takeovers of Privately-held Targets

Author : Thanh Ngo
Publisher :
ISBN 13 : 9780549052845
Total Pages : 195 pages
Book Rating : 4.0/5 (528 download)

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Book Synopsis Essays on Takeovers of Privately-held Targets by : Thanh Ngo

Download or read book Essays on Takeovers of Privately-held Targets written by Thanh Ngo and published by . This book was released on 2007 with total page 195 pages. Available in PDF, EPUB and Kindle. Book excerpt: Takeovers of privately-held targets have outnumbered takeovers of publicly-traded targets over the years. This dissertation focuses on takeover activities of privately-held targets and examines several important issues which have never been touched on in the literature. The first essay examines the factors that determine the choice between a privately-held target and a publicly-traded target. After the size of the target and the prevalence of private firms in each industry in each year are controlled for, I find that the stock bidder tends to target a privately-held firm and the cash bidder tends to target a publicly-traded firm when pursuing a high-tech target. When acquiring a firm in the same industry and being inexperienced in takeover activities, the bidder is more likely to target a publicly-traded firm as opposed to a privately-held firm. The passage of the Sarbanes-Oxley Act (SOX) also has an affect on the choice of a privately-held target or a publicly-traded target; everything else being equal, the cash bidder is more likely choose to acquire a private firm while the stock bidder is less likely to choose a private firm upon the introduction of SOX. The second essay examines the factors that influence the choice of stock versus cash payment in takeovers of privately-held targets. Stock is found to be more frequently used among takeovers in which the bidding firm has more debt and less free cash flow prior to the deal, the target is a high-tech firm, and the target management is retained in the combined entity. In addition, since the adoption of SOX, cash has been used more frequently and to greater extent among the sample of takeovers of privately-held targets. The third essay examines the effects of restrictions on resale of stock issued in takeovers on the bidder's wealth effect and long-run stock price performance. I find that restrictions on resale of stock are more popular among takeovers of privately-held targets as compared to takeovers of publicly-traded targets. Restrictions on resale are found to be positively related to the bidder's announcement abnormal return and negatively related to the bidder's long-run stock price performance.

The Take-Over Market for Privately Held Companies

Author : James S. Ang
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Take-Over Market for Privately Held Companies by : James S. Ang

Download or read book The Take-Over Market for Privately Held Companies written by James S. Ang and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The volume of acquisitions involving privately held firms has far surpassed that of publicly traded firms in recent years; yet this segment of the take-over market remains largely unexplored. In analysing the unique features of private target take-overs, we compare the mergers and acquisitions markets for unquoted and quoted firms on several dimensions including methods of payment, offer premiums and bidder wealth effects. Our results show that these mergers provide positive shareholder wealth benefits for bidders and relatively high premiums for privately held targets. Also, the market's reaction depends on whether it perceives the price paid for the target as too high or too low, a rational response given the sentiment at the time of the announcement.

Earnings Management Surrounding Takeover Rumours

Author : Dan Zhang
Publisher :
ISBN 13 :
Total Pages : 57 pages
Book Rating : 4.:/5 (113 download)

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Book Synopsis Earnings Management Surrounding Takeover Rumours by : Dan Zhang

Download or read book Earnings Management Surrounding Takeover Rumours written by Dan Zhang and published by . This book was released on 2018 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate whether firms manage earnings in proximity to initially published rumours of their impending takeover. Utilizing a unique sample of 1,831 takeover rumours, I find that rumoured target firms inflate their earnings prior to the rumour's publication. Rumours which are more likely to be anticipated by the target firm (rumours initiated by targets, rumours concerning financial distress, and rumours concerning the hiring of a financial advisor) provide stronger associations with earnings management than do other rumour types. I interpret results as consistent with rumored target firms attempting to benefit from higher takeover valuations if takeover bids are indeed forthcoming.

Mergers, Acquisitions, and Other Restructuring Activities

Author : Donald DePamphilis
Publisher : Academic Press
ISBN 13 : 0128150769
Total Pages : 584 pages
Book Rating : 4.1/5 (281 download)

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Book Synopsis Mergers, Acquisitions, and Other Restructuring Activities by : Donald DePamphilis

Download or read book Mergers, Acquisitions, and Other Restructuring Activities written by Donald DePamphilis and published by Academic Press. This book was released on 2019-09-04 with total page 584 pages. Available in PDF, EPUB and Kindle. Book excerpt: Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions, Tenth Edition, is the most comprehensive and cutting-edge text available on the subject. Supported by recent peer-reviewed academic research, this book provides many recent, notable deals, precedent-setting judicial decisions, government policies and regulations, and trends affecting M&As, as well as takeover strategies and tactics. Today's policies, politics and economics are reflected in the book's 40 case studies, 90% of which involve deals either announced or completed during the last several years. These cases represent friendly, hostile, highly leveraged, and cross-border transactions in ten different industries, involving public and private firms and those experiencing financial distress. Sections discuss an overview of M&As, key regulations, common strategies and tactics, how managers may choose a business strategy from available options, valuation methods and basic financial modeling techniques, the negotiating process, how deal structuring and financing are inextricably linked, how consensus is reached during the bargaining process, the role of financial models in closing the deal and strategic growth options as alternatives to domestic M&As. Provides a rigorous discussion of the strengths and limitations of financial modeling as applied to M&A and how these models can be applied in various areas Includes new academic research and updated/revised case studies Presents updated M&A tactics and strategies, along with court cases and new regulations governing business combinations, valuation methodologies and financing

Art of M and A Due Diligence

Author : Alexandra Reed Lajoux
Publisher : McGraw Hill Professional
ISBN 13 : 9780071378796
Total Pages : 504 pages
Book Rating : 4.3/5 (787 download)

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Book Synopsis Art of M and A Due Diligence by : Alexandra Reed Lajoux

Download or read book Art of M and A Due Diligence written by Alexandra Reed Lajoux and published by McGraw Hill Professional. This book was released on 2000 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Art of M&A Due diligence is today's most useful guidebook for uncovering problems and inconsistencies while they are still manageable.

Handbook of Financial Engineering

Author : Constantin Zopounidis
Publisher : Springer Science & Business Media
ISBN 13 : 0387766820
Total Pages : 494 pages
Book Rating : 4.3/5 (877 download)

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Book Synopsis Handbook of Financial Engineering by : Constantin Zopounidis

Download or read book Handbook of Financial Engineering written by Constantin Zopounidis and published by Springer Science & Business Media. This book was released on 2010-07-25 with total page 494 pages. Available in PDF, EPUB and Kindle. Book excerpt: This comprehensive handbook discusses the most recent advances within the field of financial engineering, focusing not only on the description of the existing areas in financial engineering research, but also on the new methodologies that have been developed for modeling and addressing financial engineering problems. The book is intended for financial engineers, researchers, applied mathematicians, and graduate students interested in real-world applications to financial engineering.

Earnings Management

Author : Joshua Ronen
Publisher : Springer Science & Business Media
ISBN 13 : 0387257713
Total Pages : 587 pages
Book Rating : 4.3/5 (872 download)

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Book Synopsis Earnings Management by : Joshua Ronen

Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?

Corporate Takeovers

Author : Alan J. Auerbach
Publisher : University of Chicago Press
ISBN 13 : 0226032167
Total Pages : 354 pages
Book Rating : 4.2/5 (26 download)

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Book Synopsis Corporate Takeovers by : Alan J. Auerbach

Download or read book Corporate Takeovers written by Alan J. Auerbach and published by University of Chicago Press. This book was released on 2013-12-30 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: The takeover boom that began in the mid-1980s has exhibited many phenomena not previously observed, such as hostile takeovers and takeover defenses, a widespread use of cash as a means of payment for targeted firms, and the acquisitions of companies ranking among the largest in the country. With the aim of more fully understanding the implications of such occurances, contributors to this volume consider a broad range of issues as they analyze mergers and acquisitions and study the takeoveer process itself.

Handbook of Quantitative Finance and Risk Management

Author : Cheng-Few Lee
Publisher : Springer Science & Business Media
ISBN 13 : 0387771174
Total Pages : 1700 pages
Book Rating : 4.3/5 (877 download)

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Book Synopsis Handbook of Quantitative Finance and Risk Management by : Cheng-Few Lee

Download or read book Handbook of Quantitative Finance and Risk Management written by Cheng-Few Lee and published by Springer Science & Business Media. This book was released on 2010-06-14 with total page 1700 pages. Available in PDF, EPUB and Kindle. Book excerpt: Quantitative finance is a combination of economics, accounting, statistics, econometrics, mathematics, stochastic process, and computer science and technology. Increasingly, the tools of financial analysis are being applied to assess, monitor, and mitigate risk, especially in the context of globalization, market volatility, and economic crisis. This two-volume handbook, comprised of over 100 chapters, is the most comprehensive resource in the field to date, integrating the most current theory, methodology, policy, and practical applications. Showcasing contributions from an international array of experts, the Handbook of Quantitative Finance and Risk Management is unparalleled in the breadth and depth of its coverage. Volume 1 presents an overview of quantitative finance and risk management research, covering the essential theories, policies, and empirical methodologies used in the field. Chapters provide in-depth discussion of portfolio theory and investment analysis. Volume 2 covers options and option pricing theory and risk management. Volume 3 presents a wide variety of models and analytical tools. Throughout, the handbook offers illustrative case examples, worked equations, and extensive references; additional features include chapter abstracts, keywords, and author and subject indices. From "arbitrage" to "yield spreads," the Handbook of Quantitative Finance and Risk Management will serve as an essential resource for academics, educators, students, policymakers, and practitioners.