Earnings Management Analysis In M&A Of Chinese Listed Companies

Since the 1990s, after nearly twenty years development China's stock market had gradually become maturity and provided more and more relaxed environment for mergers and acquisitions(M&A).Now M&A is considered a better way to expand by low cost for Chinese listed companies.This paper investigates the earnings management in M&A of Chinese listed companies. First, divided the mergers into synergistic acquisitions and agent-based mergers by motivation, and found that under different motivations the acquisition performances do not meet the expectations, so the management had to take earnings management.Choose a sample of 561 listed firms of Shanghai and Shenzhen Stock Exchanges in 2008 which took place mergers except the listed companies under special treatment, by using the modified Jones model to measure the nondiscretionary accruals in the merger year and the year before. The results show that in the merger year before, the companies have the incentive to reduce the nondiscretionary accruals, but in the merger year the actives is reversed, the companies have the incentive to increase the nondiscretionary accruals.In addition, this paper also has a study on earnings management in M&A of Chinese listed companies under special treatment. Found that ST companies tend to take an acquisition with good performance enterprises, to keep the financing capacity in the capital market.