We provide evidence suggesting that managers use financial statement misstatements which improve reported results to facilitate acquisitions. Specifically, we find that firms misstating their financial statements are more likely to make stock-based acquisitions, but not cash-based acquisitions,...

We investigate if timely loss recognition is associated with acquisition-investment decisions. Using a Basu (1997) piece-wise linear regression model, we find that firms with more timely incorporation of economic losses into earnings make more profitable acquisitions, measured by the bidder's...

In late 2008 Selectica's net operating loss poison pill was triggered by Trilogy/Versata. Litigation ensued in Delaware Court of Chancery over the propriety of the poison pill, which Selectica instituted to protect its $167 million of NOLs from the limitations of Internal Revene Code (I.R.C.)...

A large body of literature demonstrates that acquisitions are on average value-destroying for the acquirer. We investigate whether the change in the acquirer's information uncertainty contributes to acquirer wealth losses. Information uncertainty affects the discount rate (the cost of capital),...

During the year prior to management buyout (MBOs) announcements, target firms exhibit abnormally high discretionary expenses in selling, general and administration, abnormally low discretionary accruals, and realize losses from asset sales. Higher discretionary expenses and losses from asset...

This paper investigates whether and how financial restatements affect the market for corporate control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score-matched sample of non-restating firms. For those...

This paper examines changes in acquirer and target companies' Credit Default Swap (CDS) spreads as a proxy for default risk around official mergers and acquisitions (M&A) announce-ments. Related literature extensively documents wealth effects triggered by M&A from the shareholders' perspective,...

Using combinations of accounting and stock market performance measures, we advance a comprehensive multidimensional framework for modelling management performance. This framework proposes “poor” management, “myopia”, “hyperopia” and “efficient” management, as four distinct...

This study investigates acquiring firms' earnings management (EM) strategies around mergers and acquisition (M&A) in the US market and analyzes firm's post-acquisition performance. Acquirers are shown to use both accruals management (AM) and real earnings management (REM), both prior to and...

This study finds that pro-forma earnings forecasts by bidding firms during acquisitions are associated with a higher likelihood of deal completion, expedited deal closing, and with a lower acquisition premium − but only in stock-financed acquisitions. Analysts also respond to these forecasts...