Accounting Rules and Post-Acquisition Profitability in Business Combinations
研究发现并购后盈利能力下降部分源于购买法会计规则，包括存货、递延收入、研发支出及资产公允价值调整的折旧摊销影响，投资者和分析师未能完全识别这些会计效应。
SYNOPSIS: Prior studies report a decline or no change in acquirers' profitability after a merger or business acquisition. Those studies, however, do not consider the downward impact on profitability that stems from use of the “purchase accounting” (and in later periods, “acquisition”) method for business combinations. Drawing on financial statement data from both targets and acquirers, we estimate the effects of the application of purchase/acquisition method accounting rules on post-acquisition profitability. We find that recognition rules for acquired inventories, deferred revenues, in-process research and development (IPR&D), and depreciation and amortization expense resulting from writing acquired assets up to fair value vis-á-vis purchase/acquisition accounting methods are all important sources of downward pressure in post-acquisition profitability. We find that investors and analysts appear to recognize the effects of IPR&D in assessing post-acquisition profitability of the combined entity. The findings also suggest that investors and analysts do not appear to fully incorporate the accounting effects related to inventories, deferred revenues, and depreciation and amortization expense for post-acquisition profitability. Data Availability: All data are publicly available from sources identified.