Research On Acquirer Earnings Management In M&A Of Chinese Listed Companies

Mergers and acquisitions(M&A)is regarded as an effective allocation of social resources and an important way for enterprises to complete low-cost external expansion.It has been in-creasingly active in China's capital market over the past two decades,especially in the adjust-ment of economic structure,eliminating backward production capacity,enhancing industry con-centration,deepening the reform of state-owned enterprises and accelerating the development of private enterprises.On the one hand,the increasing wealth of trading methods and the grad-ual improvement of regulatory policies have provided fertile ground for the rapid development of mergers and acquisitions.On the other hand,several pause of IPO business in China have forcibly forced many queuing companies to choose to be acquired by listed companies,in order to achieve indirect listing,which also played a boost for the continued upsurge of mergers and acquisitions.However,the fact shows that M&A did not meet the expectations.After the com-pletion of the M&A,a considerable number of listed companies appeared in varying degrees of performance decline.The possible management of earnings in M&A has aroused the attention of scholars,that it may have an impact on the performance after the acquisition.Therefore,this paper holds that it is of great significance to study the earnings management behavior before the acquisition of acquirer companies.Based on the definition of M&A and earnings management,this paper reviews the domestic and foreign scholars,research on earnings management in M&A,and expounds the relevant theoretical achievements.On the basis of this,two hypotheses on the behavior of the main and parallel earnings management in the mergers and acquisitions of listed companies in China are put forward,and the combination of theoretical analysis and empirical test is carried out.This paper analyzes the Nash equilibrium in earnings management decision from the per-spective of game theory,and points out that in either case,both the mergers and acquisitions,as "rational people",will choose earnings management to maximize their own interest.Then through further research,it is found that there is positive earnings management motive of acquir-er side before the acquisition of M&A,and there is reverse earnings management motive before the cash payment M&A occurs.In the empirical study,this paper firstly improves the cross-section modified Jones model,and then uses the improved model and the real surplus manage-ment model to study the acquirer side of major asset reorganization in China's A-share market in 2014-2015.The results show that the acquirer companies have both real and accrual earn-ings management before the merger acquisition,and the payment method has an impact on the direction of earnings management.Finally,by comparing the effectiveness of the cross-section modified Jones model before and after the improvement,it is confirmed that the improved model is better.