Common auditors in M&A transactions

Cited 17 time in webofscience Cited 0 time in scopus
  • Hit : 59
  • Download : 0
We examine merger and acquisition (M&A) transactions in which the acquirer and the target share a common auditor. We predict that a common auditor can help merging firms reduce uncertainty throughout the acquisition process, which allows managers to more efficiently allocate their capital, resulting in higher quality M&As. Consistent with our prediction, we find that deals with common auditors have higher acquisition announcement returns than do non-common-auditor deals. Further, we find that the common auditor effect is more pronounced for deals with greater pre-acquisition uncertainty and deals involving acquirers and targets that are audited by the same local office of the common auditor. We also find that there is an increased probability of an M&A for firms with a common auditor. Collectively, our evidence suggests that common auditors act as information intermediaries for merging firms, resulting in higher quality acquisitions. (C) 2015 Elsevier B.V. All rights reserved.
Publisher
ELSEVIER SCIENCE BV
Issue Date
2016-02
Language
English
Article Type
Article
Keywords

FINANCIAL STATEMENT COMPARABILITY; FIRMS INVESTMENT DECISIONS; EARNINGS MANAGEMENT; MERGER ANNOUNCEMENTS; ACQUIRER RETURNS; STOCK RETURNS; INFORMATION ASYMMETRY; CORPORATE GOVERNANCE; MARKET PERFORMANCE; CAPITAL-INVESTMENT

Citation

JOURNAL OF ACCOUNTING & ECONOMICS, v.61, no.1, pp.77 - 99

ISSN
0165-4101
DOI
10.1016/j.jacceco.2015.01.004
URI
http://hdl.handle.net/10203/244349
Appears in Collection
MT-Journal Papers(저널논문)
Files in This Item
There are no files associated with this item.
This item is cited by other documents in WoS
⊙ Detail Information in WoSⓡ Click to see webofscience_button
⊙ Cited 17 items in WoS Click to see citing articles in records_button

qr_code

  • mendeley

    citeulike


rss_1.0 rss_2.0 atom_1.0