RESEARCH ARTICLE
Acquisition deal characteristics and earnings management: New evidence from Gulf Cooperation Council countries
Mahmoud Alghemary,
Basil Al-Najjar,
Nereida Polovina,
Corresponding Author
Mahmoud Alghemary
Accounting and Finance, Global Banking School, London, UK
Correspondence
Mahmoud Alghemary, Accounting and Finance, Global Banking School, London, UK.
Email: [email protected]
Search for more papers by this authorBasil Al-Najjar
Finance and Economics, Manchester Metropolitan University, Manchester, UK
Search for more papers by this authorNereida Polovina
Finance and Economics, Manchester Metropolitan University, Manchester, UK
Search for more papers by this authorMahmoud Alghemary,
Basil Al-Najjar,
Nereida Polovina,
Corresponding Author
Mahmoud Alghemary
Accounting and Finance, Global Banking School, London, UK
Correspondence
Mahmoud Alghemary, Accounting and Finance, Global Banking School, London, UK.
Email: [email protected]
Search for more papers by this authorBasil Al-Najjar
Finance and Economics, Manchester Metropolitan University, Manchester, UK
Search for more papers by this authorNereida Polovina
Finance and Economics, Manchester Metropolitan University, Manchester, UK
Search for more papers by this authorAbstract
In this study, we empirically investigate the association between acquisition deal characteristics and two forms of earnings management: accruals earnings management and real earnings management. Our focus is on acquiring firms listed in six Gulf Cooperation Council (GCC) countries. Employing a panel data approach to explore these interrelationships, our findings suggest that acquiring companies involved in cross-border deals tend to resort to accruals earnings management before the acquisition rather than real earnings management. Conversely, acquiring firms engaged in unrelated industrial deals are inclined to employ real earnings management over accruals earnings management. Moreover, our analysis indicates that the extent of acquired ownership acts as an effective tool in mitigating both forms of earnings management. Similarly, cash payment acquisitions emerge as an efficient means of curtailing both accruals and real earnings management. These results underscore that the engagement of GCC acquiring firms in earnings management is influenced by the specific characteristics inherent in the acquisition deals.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.
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