Institutional investors, corporate governance, and earnings management around merger: evidence from French absorbing firms


  • Mouna Njah Faculty of Economic Science and Management, Sfax University, Sfax, Tunisia
  • Anis Jarboui Higher Institute of Business Administration, Sfax University, Sfax, Tunisia


Merger, Institutional investors, Discretionary accruals, Earnings management, Corporate governance


This paper examines the association between institutional ownership and the earnings management behavior of some French absorbing firms. Using a sample of 76 French mergers and absorptions concluded over the period ranging from 2000 to 2010, we undertake to present some empirical evidence highlighting that absorbing-firms manipulate earnings relevant to the year preceding the merger-offer in the presence of institutional cross-holding. However, the presence of active institutions turns out to limit the managerial accruals discretion. The monitoring role exerted by the active-institutional investors does restrict the opportunities of earnings management around mergers and acquisitions. Further analyses suggest that the average value of discretionary accruals with regards to the absorbing firms proves to be influenced by the nature of merger deal (takeover vs. restructuring).

DOI: 10.1016/S2077-1886(13)70033-7


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How to Cite

Njah, M. ., & Jarboui, A. . (2013). Institutional investors, corporate governance, and earnings management around merger: evidence from French absorbing firms. Journal of Economics, Finance and Administrative Science, 18(35), 89–96. Retrieved from