TY - JOUR
T1 - Earnings management, lawsuits, and stock-for-stock acquirers' market performance
AU - Gong, Guojin
AU - Louis, Henock
AU - Sun, Amy X.
PY - 2008/9
Y1 - 2008/9
N2 - There is a positive association between stock-for-stock acquirers' pre-merger abnormal accruals and post-merger announcement lawsuits. The market only partially anticipates the effects of post-merger announcement lawsuits at the merger announcement and the post-merger announcement long-term market underperformance is largely limited to litigated acquisitions. Overall, the evidence suggests that it is important that investors not only undo the direct stock price effects of earnings management but also factor the contingent legal costs associated with earnings management.
AB - There is a positive association between stock-for-stock acquirers' pre-merger abnormal accruals and post-merger announcement lawsuits. The market only partially anticipates the effects of post-merger announcement lawsuits at the merger announcement and the post-merger announcement long-term market underperformance is largely limited to litigated acquisitions. Overall, the evidence suggests that it is important that investors not only undo the direct stock price effects of earnings management but also factor the contingent legal costs associated with earnings management.
UR - http://www.scopus.com/inward/record.url?scp=56349117945&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=56349117945&partnerID=8YFLogxK
U2 - 10.1016/j.jacceco.2008.03.001
DO - 10.1016/j.jacceco.2008.03.001
M3 - Article
AN - SCOPUS:56349117945
SN - 0165-4101
VL - 46
SP - 62
EP - 77
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 1
ER -