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M&A-induced shifts in earnings management: Evidence from US acquirers

Chuting Feng Orcid Logo, Tunyi Tunyi Abongeh Orcid Logo, Konstantinos Tolikas Orcid Logo

International Review of Financial Analysis, Start page: 105253

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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DOI (Published version): 10.1016/j.irfa.2026.105253

Abstract

We examine earnings management (EM) following mergers and acquisitions (M&As),focusing on firms’ choice between accrual-based earnings management (AEM) andreal earnings management (REM). Using a large sample of U.S. public acquirers,we find that firms strategically substitute AEM with REM follow...

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Published in: International Review of Financial Analysis
ISSN: 1057-5219
Published: Elsevier BV 2026
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa72018
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last_indexed 2026-06-13T05:39:51Z
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spelling 2026-06-12T13:55:35.7760671 v2 72018 2026-06-06 M&A-induced shifts in earnings management: Evidence from US acquirers eefe2792c8eed5b49feede33981dfa53 0000-0002-5761-931X Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2026-06-06 CBAE We examine earnings management (EM) following mergers and acquisitions (M&As),focusing on firms’ choice between accrual-based earnings management (AEM) andreal earnings management (REM). Using a large sample of U.S. public acquirers,we find that firms strategically substitute AEM with REM following M&A completion.This shift is more pronounced among firms facing greater business complexityand analyst scrutiny, consistent with managers favoring less transparent formsof earnings manipulation in the post-merger environment. We further show thatmanagerial and governance characteristics shape post-merger EM strategies. Firmsled by highly capable managers exhibit greater use of REM, whereas institutionalownership and female CEO leadership are associated with lower REM. In addition,firms experiencing poorer M&A performance engage more intensively in REM, suggestingthat pressure to justify acquisition outcomes influences reporting behavior.Overall, our findings highlight the important role of governance and leadership inshaping post-merger earnings management strategies and constraining opportunisticfinancial reporting during the integration period. Journal Article International Review of Financial Analysis 105253 Elsevier BV 1057-5219 12 6 2026 2026-06-12 10.1016/j.irfa.2026.105253 https://doi.org/10.1016/j.irfa.2026.105253 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Not Required 2026-06-12T13:55:35.7760671 2026-06-06T13:03:46.9449271 School of Management Accounting and Finance Chuting Feng 0000-0003-3085-4173 1 Tunyi Tunyi Abongeh 0000-0002-5761-931X 2 Konstantinos Tolikas 0000-0001-8281-0709 3
title M&A-induced shifts in earnings management: Evidence from US acquirers
spellingShingle M&A-induced shifts in earnings management: Evidence from US acquirers
Tunyi Tunyi Abongeh
title_short M&A-induced shifts in earnings management: Evidence from US acquirers
title_full M&A-induced shifts in earnings management: Evidence from US acquirers
title_fullStr M&A-induced shifts in earnings management: Evidence from US acquirers
title_full_unstemmed M&A-induced shifts in earnings management: Evidence from US acquirers
title_sort M&A-induced shifts in earnings management: Evidence from US acquirers
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Chuting Feng
Tunyi Tunyi Abongeh
Konstantinos Tolikas
format Journal article
container_title International Review of Financial Analysis
container_start_page 105253
publishDate 2026
institution Swansea University
issn 1057-5219
doi_str_mv 10.1016/j.irfa.2026.105253
publisher Elsevier BV
college_str School of Management
hierarchytype
hierarchy_top_id schoolofmanagement
hierarchy_top_title School of Management
hierarchy_parent_id schoolofmanagement
hierarchy_parent_title School of Management
department_str Accounting and Finance{{{_:::_}}}School of Management{{{_:::_}}}Accounting and Finance
url https://doi.org/10.1016/j.irfa.2026.105253
document_store_str 0
active_str 0
description We examine earnings management (EM) following mergers and acquisitions (M&As),focusing on firms’ choice between accrual-based earnings management (AEM) andreal earnings management (REM). Using a large sample of U.S. public acquirers,we find that firms strategically substitute AEM with REM following M&A completion.This shift is more pronounced among firms facing greater business complexityand analyst scrutiny, consistent with managers favoring less transparent formsof earnings manipulation in the post-merger environment. We further show thatmanagerial and governance characteristics shape post-merger EM strategies. Firmsled by highly capable managers exhibit greater use of REM, whereas institutionalownership and female CEO leadership are associated with lower REM. In addition,firms experiencing poorer M&A performance engage more intensively in REM, suggestingthat pressure to justify acquisition outcomes influences reporting behavior.Overall, our findings highlight the important role of governance and leadership inshaping post-merger earnings management strategies and constraining opportunisticfinancial reporting during the integration period.
published_date 2026-06-12T06:39:51Z
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score 11.108446

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