The results have implications for the literature on the spillover of financial reporting practices across countries due to crossвЂђborder business activities, especially in the context of emerging markets, which are known for their weak investor protection and underdeveloped institutional environment. Our finding is robust even after controlling for crossвЂђlisting and endogeneity associated with crossвЂђborder acquisition decision. Additional analysis indicates that acquisition results in increased earnings response coefficient for the acquirer firms relative to the control firms. Further, crossвЂђsectional 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.

Using two proxies for earnings management, we find that crossвЂђborder acquisition reduces the incentive to manipulate earnings by way of accruals, but not via real economic transactions. The present study examines the impact of crossвЂђborder acquisition on the earnings manipulation of emerging market firms by analyzing the crossвЂђborder deals from India during the period 2000вЂ“2015. CrossвЂђborder acquisitions by emerging market firms have been increasing at an accelerated pace.

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