Mergers and acquisitions(M&As)are among the most important investment activities for companies,but they contain great risks.We investigate the role of accounting conservatism in M&A target selection and risk.W...Mergers and acquisitions(M&As)are among the most important investment activities for companies,but they contain great risks.We investigate the role of accounting conservatism in M&A target selection and risk.We find that for risk-averse reasons,firms with high accounting conservatism are likely to acquire profitable targets and avoid loss-making targets.When such firms acquire loss-making targets,the conservatism’s risk-control role reduces M&A risk and increases M&A performance,but only when control of the target is transferred and the acquirer has high long-term debt and low management power.Furthermore,accounting conservatism reduces risk by increasing the maturity match between cash flow and debt.Our results suggest that accounting conservatism plays not only a risk-averse role but also a riskcontrol role,providing new evidence for the usefulness of accounting conservatism in M&A decisions.展开更多
基金supported by funds from the National Natural Science Foundation of China(No.71790603,71672204)
文摘Mergers and acquisitions(M&As)are among the most important investment activities for companies,but they contain great risks.We investigate the role of accounting conservatism in M&A target selection and risk.We find that for risk-averse reasons,firms with high accounting conservatism are likely to acquire profitable targets and avoid loss-making targets.When such firms acquire loss-making targets,the conservatism’s risk-control role reduces M&A risk and increases M&A performance,but only when control of the target is transferred and the acquirer has high long-term debt and low management power.Furthermore,accounting conservatism reduces risk by increasing the maturity match between cash flow and debt.Our results suggest that accounting conservatism plays not only a risk-averse role but also a riskcontrol role,providing new evidence for the usefulness of accounting conservatism in M&A decisions.
