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Research On The Effect Of Law Protection On Earnings Management In Mergers And Acquisitions

Posted on:2019-08-15Degree:MasterType:Thesis
Country:ChinaCandidate:W K NieFull Text:PDF
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Mergers and acquisitions(M&A)is a enduring topic in capital market.With the deepening of marketization reform and opening wider to the outside world,M&A plays an irreplaceable role as expanding the scale of enterprises,optimizing industrial structure and enhancing international competitiveness.Constantly attracts scholars to study the financial behavior of companies in M&A.Whether both sides of companies implement earnings management activities in mergers and acquisitions activities and what factors are affected by earnings management behavior are two important issues in M&A research.Foreign research scholars mainly focus on the effect of differences institutional environment between M&A parties on the acquirer of accrued earnings management in cross-border M&A,domestic research scholars focus on the nature of property rights and payment instruments to study M&A of earnings management.Due to the unbalanced regional development in China,there are differences in the institutional environment among the provinces,and their law protection are also not in a same level.Then,whether the level of law protection in the location of the acquirer can reduce the acquirer's accrued earnings management in the M&A activities?Whether the level of law in the location of the acquirer increases the incentive for the acquirer to implement real earnings management? Whether the difference in legal protection level between M&A parties affects the choice of the management method of the acquirer's earnings? Whether there will be differences in the level of law protection against the earnings management of the acquirer under different ownership backgrounds and M&A directions? Based on the above issues,the research on the effect of law protection on the acquirer earnings management has theoretical and practical significance.This paper is based in the Wind M&A listed companies database from 2010 to2014 M&A events as the research object.After dividing the different property rights and M&A direction,we found the level of law protection in the location of the acquirer has different effects on the levels and manner of earnings management under different M&A directions and the nature of property.Law protection can significantly reduce the level of accrued earnings management of private acquirers.Local government-owned enterprises rely on their political connections with local governments in local mergers and acquisitions,they will implement positive accrual earnings management inmergers and acquisitions.When acquiring companies in areas that are below the level of law protection in acquirer location,due to the loss of political connection with the local government,the level of law protection in the acquirer's location will significantly restrain the activities of accrued earnings management.At the same time when acquiring companies in areas with higher law protection than their own locations,the higher level of law protection of the acquire's location forces the acquirer to switch to earnings management manner to implement more concealed real earnings management behavior.The central government-owned companies as a special state-owned enterprise,they has less connection with local government in M&A activities,the level of law protection in acquirer's location will change the manner of earnings management manipulation to make it more inclined to conduct real earnings management activities,as the level of acquirer's location law protection increases,the more obvious the change in this type of earnings management.Finally,depend on empirical and theoretical analysis,we formed our conclusion,propose relevant policy recommendations,point out deficiency and possible research directions in the future.
Keywords/Search Tags:Enterprise merger, Law protection, Earnings management, Enterprise nature
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