Accounting for M&A: Uses and Abuses of Accounting in Monitoring and Promoting Merger

Description

Spending on M&A has, in aggregate, grown so fast that it has even overtaken capital expenditure on increasing and maintaining physical assets. Yet McKinsey, the leading management consultancy, reports that "Anyone who has researched merger success rates knows that roughly 70% fail". The idea that businesses might be using huge and increasing sums of shareholders’ money for an activity that more often than not leads to failure calls into question the information on which M&A decisions are based. This book presents statistical studies, case material, and standard-setters’ opinions on company accounting before, during, and after M&A. It documents the manipulation of annual accounts by acquirers ahead of share for share bids, biased forecasts of post-merger earnings by bidders, and devices to flatter earnings when recording the deal. It explores the challenges for standard-setters in regulating information flows during and after M&A, and for account-users wishing to learn from financial statements how a deal has affected performance. Drawing on a wide range of international examples, this readable book is targeted not just at accounting specialists but at anyone who is comfortable reading the serious financial press, is intrigued by what is going on in the massive M&A market, and is concerned with achieving better-informed M&A. As such it might be of particular interest to business executives, lawyers, bankers, and investors involved in M&A as well as graduate students interested in researching or learning about the role of accounting in M&A. Cover Contents Abstracts Figures Tables Contributors Preface Acknowledgments Abbreviations 1 Introduction Part I Accounting procedures 2 An outline of issues in accounting for M&A 3 Seventy years of accounting standards for M&A 4 Developing new accounting standards for M&A 5 Stewardship and value-relevance in accounting for the depletion of purchased goodwill Part II Managing perceptions of performance around M&A 6 Stock prices and earnings management around M&A transactions 7 Earnings forecasts accompanying a bid 8 Managing earnings through M&A Part III Using accounts to measure the impact of M&A on performance 9 Measuring post-acquisition performance: introduction 10 An early attempt to use accounting data to estimate the impact of M&A on financial performance 11 The impact of M&A on performance 12 Operating performance improvements after corporate takeovers: fact or fallacy? 13 The financial performance of acquired companies in the Chinese stock market Part IV Concluding remarks 14 Continuing challenges in accounting for M&A Author index Companies/corporations (short form name) index Subject index