Earnings persistence in M&A transactions

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.advisor Jarva, Henry
dc.contributor.author Halttunen, Aleksi
dc.date.accessioned 2018-06-27T09:47:09Z
dc.date.available 2018-06-27T09:47:09Z
dc.date.issued 2018
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/32190
dc.description.abstract Subject This research studies earnings persistence in the context of business combinations. The study draws from the ongoing discussion of accounting information reliability and relevance after the adoption of FAS 142 standard for business combinations. Earnings persistence is studied by examining the rela-tionship of return-on-assets and its components to one-year-ahead return-on-assets. Further to test earnings persistence for companies that have done business combinations in our sample we divide our group in two sub samples based on acquired goodwill. We expect companies that have acquired goodwill to have lower earnings persistence due to write-offs of goodwill. In addition, cash flow and accruals’ earnings persistence is examined. Data and methodology The research was conducted as a single-country study including over 40 000 observations from the U.S. during 2002-2015. The hypotheses are tested with OLS regression. The financial information used in the analysis is from COMPUSTAT database. The basis of the variable formulation is Hribar & Collins’ (2002) cash flow approach. Findings The findings indicate that companies that have done business combinations have lower earnings persistence. More detailed examination shows that accrual component of earnings have stronger negative impact to earnings persistence compared to cash flow component when using cash flow information in computation of variables. Further investigation also indicates that discretionary ac-cruals have the most negative impact to future earnings persistence. en
dc.format.extent 54
dc.language.iso en en
dc.title Earnings persistence in M&A transactions en
dc.title Tuloksen pysyvyys yrityskauppatilanteissa fi
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Laskentatoimen laitos fi
dc.subject.keyword earnings persistence en
dc.subject.keyword earnings management en
dc.subject.keyword business combinations en
dc.subject.keyword accruals en
dc.identifier.urn URN:NBN:fi:aalto-201806273599
dc.type.ontasot Master's thesis en
dc.type.ontasot Maisterin opinnäyte fi
dc.programme Accounting en
dc.subject.helecon tulos fi
dc.subject.helecon yrityskaupat fi
dc.subject.helecon laskentatoimi fi
dc.subject.helecon johtaminen fi
dc.ethesisid 17148
dc.location P1 fi

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