Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions
Autor(a) principal: | |
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Data de Publicação: | 2023 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | https://hdl.handle.net/1822/86749 |
Resumo: | We investigate whether acquiring firms with earnout agreements engage in earnings management during the earnout period. Using a sample of completed deals between 1998 and 2017, we find that acquirers manage their earnings downwards during the earnout period to avoid or reduce the earnout payment to the target. We also show that lower earnout payments are associated with greater earnings manipulation. Moreover, only earnout deals with a first payment in cash are associated with income decreasing earnings management through real activities. Our findings also indicate that acquirers are more likely to engage more in real earnings management than accrual-based earnings management during the earnout period. |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Do earnouts create the right incentives?: Earnings management around earnout-based acquisitionsEarnoutsMergers and acquisitionsEarnings managementContingent paymentsWe investigate whether acquiring firms with earnout agreements engage in earnings management during the earnout period. Using a sample of completed deals between 1998 and 2017, we find that acquirers manage their earnings downwards during the earnout period to avoid or reduce the earnout payment to the target. We also show that lower earnout payments are associated with greater earnings manipulation. Moreover, only earnout deals with a first payment in cash are associated with income decreasing earnings management through real activities. Our findings also indicate that acquirers are more likely to engage more in real earnings management than accrual-based earnings management during the earnout period.Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)Universidade do MinhoCoelho, António Pedro Almeida AntunesLoureiro, Gilberto20232023-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/1822/86749enghttps://nipe.eeg.uminho.pt/publicacoes-nipe/#documentos-de-trabalhoinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-10-14T01:21:47Zoai:repositorium.sdum.uminho.pt:1822/86749Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T20:35:29.304530Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
title |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
spellingShingle |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions Coelho, António Pedro Almeida Antunes Earnouts Mergers and acquisitions Earnings management Contingent payments |
title_short |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
title_full |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
title_fullStr |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
title_full_unstemmed |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
title_sort |
Do earnouts create the right incentives?: Earnings management around earnout-based acquisitions |
author |
Coelho, António Pedro Almeida Antunes |
author_facet |
Coelho, António Pedro Almeida Antunes Loureiro, Gilberto |
author_role |
author |
author2 |
Loureiro, Gilberto |
author2_role |
author |
dc.contributor.none.fl_str_mv |
Universidade do Minho |
dc.contributor.author.fl_str_mv |
Coelho, António Pedro Almeida Antunes Loureiro, Gilberto |
dc.subject.por.fl_str_mv |
Earnouts Mergers and acquisitions Earnings management Contingent payments |
topic |
Earnouts Mergers and acquisitions Earnings management Contingent payments |
description |
We investigate whether acquiring firms with earnout agreements engage in earnings management during the earnout period. Using a sample of completed deals between 1998 and 2017, we find that acquirers manage their earnings downwards during the earnout period to avoid or reduce the earnout payment to the target. We also show that lower earnout payments are associated with greater earnings manipulation. Moreover, only earnout deals with a first payment in cash are associated with income decreasing earnings management through real activities. Our findings also indicate that acquirers are more likely to engage more in real earnings management than accrual-based earnings management during the earnout period. |
publishDate |
2023 |
dc.date.none.fl_str_mv |
2023 2023-01-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
https://hdl.handle.net/1822/86749 |
url |
https://hdl.handle.net/1822/86749 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
https://nipe.eeg.uminho.pt/publicacoes-nipe/#documentos-de-trabalho |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
publisher.none.fl_str_mv |
Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
repository.mail.fl_str_mv |
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1799133618244681728 |