Target-firm conservative accounting and the takeover premium
研究发现，目标公司并购前几年的保守会计与收购溢价负相关，且仅在目标公司事前信息不对称高时成立，表明保守会计能减少收购方因信息不确定性而多付的风险。
Abstract This study examines whether acquiring firms incur lower premiums in mergers and acquisitions (M&A) deals involving target firms reporting conservatively over the years preceding the deal. Using a sample of M&A deals between U.S. publicly listed firms over the period 1985–2022, we find that the target’s conservative accounting is negatively associated with the takeover premium. We also find that the negative association between the target’s conservative accounting and the takeover premium holds only when the target’s ex ante information asymmetry is high. These findings suggest that the target’s conservative accounting protects acquirers from an overpayment by mitigating the adverse consequences of uncertainty about the target’s value arising from the target’s high ex ante information asymmetry. In further analysis, we show that the target’s conservative accounting is also associated with the shareholder wealth of target firms, as reflected by the stock market reaction to the announcement of M&A deals. This study has important implications for accounting standard-setters regarding the informational role of accounting conservatism in the efficient allocation of economic resources in the M&A market.