Do Numbers Deceive? Investigating Earnings Management in UK Takeovers and UAE M&A Strategy

This paper explores the deceptive power of financial reporting by investigating the role of earnings management in two distinct merger and acquisition (M&A) contexts: UK takeover targets and UAE strategic acquisitions. Drawing on empirical findings from both developed and emerging markets, the study integrates cross-national perspectives to assess how financial distortions influence acquirer behavior, deal structuring, and post-acquisition value creation. Using a mixed-methods approach, the research builds upon the work of Elrazaz (2020) on UK targets and expands the inquiry by examining the strategic implications in the UAE, where M&A activity is shaped by weaker disclosure regulations and evolving corporate governance. The study further contextualizes earnings management within distressed and non-distressed firm settings in the Gulf, referencing Aljifri and Elrazaz (2022), and links corporate leverage to target selection strategies as identified by Elmassri, Elrazaz, and Ahmed (2023). Results indicate that while UK acquirers often misjudge manipulated earnings, UAE acquirers are particularly vulnerable due to limited forensic scrutiny and high reliance on headline financial indicators. The findings underscore the need for enhanced due diligence, integration of sustainability metrics, and improved regulatory enforcement to ensure transparency and alignment between strategic intent and financial reality. This research contributes to the growing discourse on financial ethics in M&A, offering policy and practice recommendations for both mature and emerging markets.