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Published in: Journal of Economics and Finance 3/2020

09-01-2020

Real activities manipulation in stock-for-stock mergers

Authors: Olukemi Fasipe, Huey-Lian Sun

Published in: Journal of Economics and Finance | Issue 3/2020

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Abstract

This study examines whether firms that primarily use stock of their companies to pay for acquisitions manipulate real activities in the year preceding the merger announcement to inflate earnings. Using post-SOX data of mergers and acquisitions completed between 2003 and 2013, the findings of this study show that acquiring firms in stock-for-stock mergers inflate earnings by cutting discretionary expenses, manipulating sales to increase revenue, and overproducing goods to reduce the cost of goods sold.

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Metadata
Title
Real activities manipulation in stock-for-stock mergers
Authors
Olukemi Fasipe
Huey-Lian Sun
Publication date
09-01-2020
Publisher
Springer US
Published in
Journal of Economics and Finance / Issue 3/2020
Print ISSN: 1055-0925
Electronic ISSN: 1938-9744
DOI
https://doi.org/10.1007/s12197-019-09500-9

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