Cross-border acquisitions by emerging market firms have been increasing at an accelerated pace. The present study examines the impact of cross-border acquisition on the earnings manipulation of emerging market firms by analyzing the cross-border deals from India during the period 2000–2015. Using two proxies for earnings management, we find that cross-border acquisition reduces the incentive to manipulate earnings by way of accruals, but not via real economic transactions. Further, cross-sectional tests reveal that the incentive to reduce accrual earnings manipulation is more pronounced when the acquisition is made in countries with a strong corporate governance structure. Additional analysis indicates that acquisition results in increased earnings response coefficient for the acquirer firms relative to the control firms. Our finding is robust even after controlling for cross-listing and endogeneity associated with cross-border acquisition decision. The results have implications for the literature on the spillover of financial reporting practices across countries due to cross-border business activities, especially in the context of emerging markets, which are known for their weak investor protection and underdeveloped institutional environment.

中文翻译：

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跨境收购是否会降低新兴市场收购方的盈余管理？来自印度的证据

新兴市场公司的跨境收购一直在加速增长。本研究通过分析 2000 年至 2015 年期间印度的跨境交易，检验了跨境收购对新兴市场公司盈利操纵的影响。使用盈余管理的两个代理，我们发现跨境收购减少了通过应计收益而不是通过实体经济交易操纵盈余的动机。此外，横截面测试表明，当收购发生在具有强大公司治理结构的国家时，减少应计盈余操纵的动机更为明显。额外的分析表明，相对于控制公司，收购导致收购公司的收益反应系数增加。即使在控制了与跨境收购决策相关的交叉上市和内生性之后，我们的发现仍然是稳健的。这些结果对有关跨国商业活动导致的跨国财务报告实践溢出的文献产生了影响，特别是在新兴市场的背景下，这些市场以投资者保护薄弱和制度环境不发达而闻名。