This study investigates the impact of performance commitments on the earnings management levels of acquiring firms in the three years following mergers and acquisitions (M&As), as well as the resulting performance reversal phenomenon. The empirical results indicate that listed companies significantly increase their earnings management levels in the three years after making performance commitments. This suggests that firms may engage in upward earnings management during the commitment period to inflate profits and achieve the promised performance. Moreover, our findings reveal that M&A transactions involving stock payments and performance commitments exhibit even higher levels of earnings management. However, such practices are unsustainable; once the commitment period ends, the previous earnings management behavior is gradually rectified, leading to a performance reversal. Further analysis demonstrates that performance commitments result in a significant decline in companies' return on assets (ROA) in the fourth and fifth years post-M&A.

中文翻译：

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时间会证明真相：并购中的绩效承诺和盈余管理


本研究调查了在并购 （M&A） 后三年内绩效承诺对收购公司盈余管理水平的影响，以及由此产生的绩效倒退现象。实证结果表明，上市公司在做出绩效承诺后的 3 年内显著提高了其盈余管理水平。这表明企业在承诺期内可能会进行向上的盈余管理，以夸大利润并实现承诺的业绩。此外，我们的研究结果显示，涉及股票支付和绩效承诺的并购交易表现出更高水平的盈余管理。然而，这种做法是不可持续的;一旦承诺期结束，之前的盈余管理行为就会逐渐得到纠正，从而导致业绩倒退。进一步分析表明，绩效承诺导致公司的资产回报率 （ROA） 在并购后的第四年和第五年大幅下降。