| Summary: | 碩士 === 靜宜大學 === 會計學系研究所 === 90 === This study investigated whether acquiring firms prior to a merger attempt to manipulate accounting profits upward in order to reduce the cost of buying the target. Account payable differences, account receivable differences and differences of other revenues and expenses were analyzed to understand in which way acquiring firms manipulate earnings. Furthermore, this study investigated whether the percentage of the acquiring firms stock owned by the management prior to the merger and the scale of the deal have an effect in the degree of manipulation of profits.
In a sample of mergers completed between January 1993 and February 2002, the Jones Model and the Modified Jones Model were used to estimate the degree of manipulation of profits. At the same time, the degree of manipulation of profits one year, two years and three years prior to a merger were examined in order to search for the correct time point of management manipulations.
The results of this study show that in the third and second year prior to a merger agreement, the acquiring firm manipulates the profit by managing account receivables downward and account payables upward. One year prior to the merger account payables are managed downward again and other revenues and expenses are manipulated as well during this final year. In addition, the scale of the deal has an effect on the degree of manipulation of profits, especially in the year prior to the merger while less visible earlier in time. However, there is no significant evidence to proof that the percentage of the stocks owned by the management of the acquiring firm prior to the merger has an effect on the degree of manipulation of profits.
|
|---|
