Enterprise Merger Under The Same Control Earnings Management&Market Reactions

The purpose of this study is to analyze the relationship between corporate mergers under the same control and earnings management of listed companies in China. The next is use empirical research to prove the link between the common control business combinations and Earnings Management and analysis the market how to identify this behavior. At last the article gives the suggestion for policy recommendations. To achieve this goal, this article first through literature review to comb the theory and make a theoretical analysis, make a data collection and then do the empirical research. This paper selects the Jones model and the market response evaluation model to do the research. Get the following conclusions, there is significant different between the companies which have the corporate merger behavior under the same control and the companies which do not have this behavior in the extent of earnings management. The second is that there is significantly correlation between the corporate merger behavior under the same control and’earnings management. The last is that the earnings response coefficient of net profit from the beginning to the combination date produced by corporate merger under the same control is lower than the earnings response coefficient of unexpected earnings. The innovation of this paper is that it is the first time to comb the corporate merger under the same control which took place in the Chinese Shanghai stock market from2008to2010.