2020
DOI: 10.2308/tar-2018-0260
|View full text |Cite
|
Sign up to set email alerts
|

Abstract: Does accounting regime play a role in the well-documented phenomenon of overbidding in M&As? The 2001 regulatory change from a goodwill amortization to a non-amortization regime (SFAS 142) affords us a quasi-experimental setting for testing the consequences of M&A accounting rules for acquirers' bidding decisions. Relying on a novel approach to modeling optimal bidding, our primary finding indicates a significant increase in overbidding in the post-2001 period, suggesting that M&A accounting has re… Show more

Help me understand this report

Search citation statements

Order By: Relevance

Paper Sections

Select...
2
1
1
1

Citation Types

0
4
1
1

Year Published

2021
2021
2023
2023

Publication Types

Select...
8

Relationship

0
8

Authors

Journals

citations
Cited by 20 publications
(6 citation statements)
references
References 41 publications
0
4
1
1
Order By: Relevance
“…e estimated 􏽢 α 1 is significantly negative at the 1% level; however, it is inconsistent with the previous literature [12,16]. Previous research suggests that the premium should be positively related to the probability of success.…”
Section: Sur Regression Resultscontrasting
confidence: 81%
See 2 more Smart Citations
“…e estimated 􏽢 α 1 is significantly negative at the 1% level; however, it is inconsistent with the previous literature [12,16]. Previous research suggests that the premium should be positively related to the probability of success.…”
Section: Sur Regression Resultscontrasting
confidence: 81%
“…Measurement of Overbidding. Following De Bodt et al [12] and Bartov et al [16], this study measures the overbidding of the acquirer in CBMAs based on the assumption of value maximization. In a competitive market without transaction costs or agency conflicts, rational managers make optimal decisions to realize the shareholders' expectations of value maximization.…”
Section: Methodsmentioning
confidence: 99%
See 1 more Smart Citation
“…Os gestores têm incentivos para atrasar ou evitar o impairment do goodwill, a fim de superestimar temporariamente o valor desse ativo, do lucro ou dos preços das ações, principalmente porque essa perda sinalizaria uma estratégia de investimento falha e um declínio no desempenho da empresa (Bartov et al, 2020;Gu & Lev, 2011;Sun, 2016). Assim, para atrasar o reconhecimento dessa perda, os gestores podem usar sua discricionariedade de modo a inflar o valor recuperável da UGC do goodwill, seja por meio de avaliações otimistas sobre a taxa de crescimento e de desconto, ou por meio do gerenciamento do fluxo de caixa (Carlin & Finch, 2009;Filip et al, 2021).…”
Section: Referencial Teóricounclassified
“…We add to the literature examining how accounting shapes acquisitions and managers' real economic decisions. Prior studies find that firms structure transactions to use the "pooling of interests" accounting at the expense of outside shareholders (Aboody, Kasznik, and Williams 2000;Weber 2004), the regime of goodwill impairment leads to overbidding in acquisitions (Bartov, Cheng, and Wu 2021), mandatory disclosure requirements regarding ownership information deter acquisition activities (Bonetti, Duro, and Ormazabal 2020), and fair value accounting induces managers' suboptimal decisions (Plantin, Sapra, and Shin 2008;Chen, Tan, and Wang 2013). In our study, we highlight that fair value accounting for earnouts enables public acquirers to obtain a "free" profit boost (e.g., AAER No.…”
Section: Introductionmentioning
confidence: 99%