Earnings management around mergers and acquisitions: evidence from a range of French absorbing firms' accounting policy

The objective of this study consists in implementing an empirical assessment with regard to the validity of the earnings management hypothesis within the specific mergers and absorptions' context. Using a sample of 76 French undertaken mergers and absorptions occurring over the period ranging from 2000 to 2010, the achieved empirical results reveal that the discretionary-accruals average value for the acquiring firms turns out to be positive with regard to the year preceding a merger conclusion. Indeed, the absorbing firms' average discretionary accruals prove to vary between 5.99% and 7.34% of the total assets, depending on the adopted earnings-management evaluation model.mergers and acquisitions; M%A; earnings management; France; accounting policy; discretionary accruals