Common auditors in M&A transactions

• 成果类型: Article
• 署名作者: Cai, Ye; Kim, Yongtae; Park, Jong Chool; White, Hal D.
• 署名单位: Santa Clara University; Old Dominion University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.01.004
• 发表日期: 2016
• 关键词: earnings management; information asymmetry; corporate governance; accounting quality; synergistic gains; Investment banks; Market reaction; BIDDING FIRMS; STOCK; acquisitions

摘要

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.