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

See all articles by Aref Mahdavi Ardekani

Aref Mahdavi Ardekani

University of Paris 1 Pantheon-Sorbonne, CES; Université de Limoges, LAPE

Nejat Younesi

Multimedia University (MMU)

Mohammad Hashemijoo

Florida International University (FIU); Multimedia University (MMU)

Date Written: 2012

Abstract

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

Mahdavi Ardekani, Aref and Younesi, Nejat and Hashemijoo, Mohammad and Hashemijoo, Mohammad, Acquisition, Earnings Management and Firm’s Performance: Evidence from Malaysia (2012). Journal of Business Studies Quarterly, 2012, Vol. 4, No. 1, pp. 91-110, Available at SSRN: https://ssrn.com/abstract=2146957

Aref Mahdavi Ardekani (Contact Author)

University of Paris 1 Pantheon-Sorbonne, CES ( email )

106-112 Boulevard de l'hopital
106-112 Boulevard de l'Hôpital
Paris Cedex 13, 75647
France

Université de Limoges, LAPE

5 rue Félix Eboué BP3127
LIMOGES, 87031
France

Nejat Younesi

Multimedia University (MMU)

Jalan Multimedia
Cyberjaya, Selangor 63100
Malaysia

Mohammad Hashemijoo

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Multimedia University (MMU) ( email )

Jalan Multimedia
Cyberjaya, Selangor 63100
Malaysia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
543
Abstract Views
3,461
rank
66,715
PlumX Metrics