Earnings management and payment methods in M&A in Brazil
Published:
Nov 8, 2025
Volume:
23
Keywords:
Mergers and acquisitions
Earnings management
Payment methods
Abstract
This article examined the relationships between Earnings Management strategies and the payment method in Mergers and Acquisitions (M&As), based on Signaling Theory. It used data from 103 M&As between 2010 and 2023 involving companies listed on B3, collected from the Refinitiv® database, and applied Logit regression model. The results indicated that real earning management (REM) practices made in the period prior to the M&As did not affect the likelihood of acquiring firms using their shares to complete the deal. On the other hand, accrual based earnings management (AEM) practices positively influenced the likelihood of acquiring firms using cash to settle the M&As. These findings contribute by signaling that AEM practices are related to the choice of payment method in M&As. This may be linked to the maintenance of better financing conditions, which are typically utilized by firms that settle M&As in cash.
How to cite
Elizio Marcos Reis, Wagner Moura Lamounier. Earnings management and payment methods in M&A in Brazil. Brazilian Review of Finance, v. 23, n. 1, 2025. p. e202518. DOI: 10.12660/rbfin.v23n1.2025.94117.
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