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http://hdl.handle.net/10397/94401
Title: | Overbidding in mergers and acquisitions : an accounting perspective | Authors: | Bartov, E Cheng, CSA Wu, H |
Issue Date: | Mar-2021 | Source: | Accounting review, Mar. 2021, v. 96, no. 2, p. 55-79 | 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 real consequences for bidding decisions, and that this result is robust to a battery of sensitivity tests. In addition, supplementary tests show that overbidding is more pronounced in pooling versus purchase transactions, and that the accounting regime's implications for overbidding and acquisition premium are distinct. Overall, our findings shed light on the role accounting plays in shaping managerial decisions-and, ultimately, shareholder wealth-in an important corporate setting. They may thus inform researchers, corporate boards, and standards setters. | Keywords: | Overbidding Mergers and acquisitions SFAS no. 141 SFAS no. 142 |
Publisher: | American Accounting Association | Journal: | Accounting review | ISSN: | 0001-4826 | EISSN: | 1558-7967 | DOI: | 10.2308/TAR-2018-0260 | Rights: | This is the accepted manuscript of the following article: Bartov, E., Cheng, C. S., & Wu, H. (2021). Overbidding in mergers and acquisitions: An accounting perspective. The Accounting Review, 96(2), 55-79, which has been published in final form at https://doi.org/10.2308/TAR-2018-0260 |
Appears in Collections: | Journal/Magazine Article |
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Cheng_Overbidding_Mergers_And.pdf | Pre-Published version | 313.21 kB | Adobe PDF | View/Open |
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