Institutional Investors, Corporate Governance, and Earnings Management Around Merger

Download or read book Institutional Investors, Corporate Governance, and Earnings Management Around Merger written by Njah Mouna and published by . This book was released on 2013 with total page 8 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the association between institutional ownership and the earnings management behavior of some French absorbing firms. Using a sample of 76 French mergers and absorptions concluded over the period ranging from 2000 to 2010, we undertake to present some empirical evidence highlighting that absorbing-firms manipulate earnings relevant to the year preceding the merger-offer in the presence of institutional cross-holding. However, the presence of active institutions turns out to limit the managerial accruals discretion. The monitoring role exerted by the active-institutional investors does restrict the opportunities of earnings management around mergers and acquisitions. Further analyses suggest that the average value of discretionary accruals with regards to the absorbing firms proves to be influenced by the nature of merger deal (takeover vs. restructuring).