THE EFFECTS OF EARNINGS MANAGEMENT ON ACQUIRING FIRM’S POST-ACQUISITION PERFORMANCE (An Empirical Study in Indonesian Public Acquiring Firms from 2006-2017)

Abstract

This study aims to examine the effects of earnings management conducted by public acquiring firms on subsequent post-acquisition performance. The earnings management are separated into Accrual Management, Sales manipulation, abnormal discretionary expenditures, and abnormal production cost. The number of samples were determined using the purposive sampling method, which obtained a total of 259 samples, consitsted of 37 public companies that are engaging in an acquisition and completed said deals from 2009-2014. Panel Regression on Econometric Views 10th Edition was used to examine the data. Findings of this study show that managing earnings through accruals would affect the company’s post-acquisition performance, overproduction seems to generate the same result. Meanwhile, manipulating sales and altering discretionary expenditures did not significantly affect company’s post-acquisition performance.