Earnings Management Research on Mergers and Acquisitions of Chinese Listed Companies

Now mergers and acquisitions (M&A) is considered an effective way to integrate resources and to expand by low cost for Chinese listed companies. This paper investigates the earnings management in M&A of Chinese listed companies. Found that under different motivations the acquisition performances do not meet the expectations, so the management had to take earnings management. Choose a sample of 878 listed companies of Shanghai and Shenzhen Stock Exchanges in 2012 which took place mergers except the listed companies under special treatment, using the modified Jones model to measure the non-manipulated accruals in the merger year and the year before. The results show that in previous year, the companies have the incentive to reduce the non-manipulated accruals, however, they have tends to increase the non-manipulated accruals in the merger year.