Directors’ recommendations on takeover bids and the management of earnings: Evidence from Australian takeovers

Eddey, PH; Taylor, SL

Directors’ recommendations on takeover bids and the management of earnings: Evidence from Australian takeovers

Eddey, PH Taylor, SL

Permalink

Publication Type:: Journal Article
Citation:: Abacus, 1999, 35 (1), pp. 29 - 45
Issue Date:: 1999-01-01

Closed Access

	Filename	Description	Size
	2007003396OK.pdf		1.01 MB	Adobe PDF	View/Open

Copyright Clearance Process

Recently Added
In Progress
Closed Access

This item is closed access and not available.

Full metadata record

Field	Value	Language
dc.contributor.author	Eddey, PH	en_US
dc.contributor.author	Taylor, SL https://orcid.org/0000-0001-8870-4966	en_US
dc.date.issued	1999-01-01	en_US
dc.identifier.citation	Abacus, 1999, 35 (1), pp. 29 - 45	en_US
dc.identifier.issn	0001-3072	en_US
dc.identifier.uri	http://hdl.handle.net/10453/10150
dc.description.abstract	This article investigates whether Australian companies manage their earnings during takeover bids in a manner consistent with the earnings-management hypothesis. This hypothesis predicts that directors who reject a bid use accrual accounting to increase current earnings, supporting their claim that the bid, relative to earnings, is inadequate. Likewise, directors who accept a bid are predicted to use accrual accounting to decrease current earnings. Overall, the results are not consistent with the earnings-management hypothesis. However, some components of unexpected accruals (our proxy for managed earnings) change in the direction predicted by the earnings-management hypothesis, although these changes are not statistically significant. Using industry adjusted performance measures the conclusion is that unexpected accruals are primarily a manifestation of poor financial performance of target firms in the period leading up to the takeover bid. © 1999 Accounting Foundation, University of Sydney.	en_US
dc.relation.ispartof	Abacus	en_US
dc.relation.isbasedon	10.1111/1467-6281.00033	en_US
dc.subject.classification	Accounting	en_US
dc.title	Directors’ recommendations on takeover bids and the management of earnings: Evidence from Australian takeovers	en_US
dc.type	Journal Article
utslib.citation.volume	1	en_US
utslib.citation.volume	35	en_US
utslib.for	150303 Corporate Governance and Stakeholder Engagement	en_US
utslib.for	150103 Financial Accounting	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	1	en_US
pubs.publication-status	Published	en_US
pubs.volume	35	en_US

Abstract:

This article investigates whether Australian companies manage their earnings during takeover bids in a manner consistent with the earnings-management hypothesis. This hypothesis predicts that directors who reject a bid use accrual accounting to increase current earnings, supporting their claim that the bid, relative to earnings, is inadequate. Likewise, directors who accept a bid are predicted to use accrual accounting to decrease current earnings. Overall, the results are not consistent with the earnings-management hypothesis. However, some components of unexpected accruals (our proxy for managed earnings) change in the direction predicted by the earnings-management hypothesis, although these changes are not statistically significant. Using industry adjusted performance measures the conclusion is that unexpected accruals are primarily a manifestation of poor financial performance of target firms in the period leading up to the takeover bid. © 1999 Accounting Foundation, University of Sydney.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/10150