Do key audit matter disclosures about M&A transactions predict future performance?

• 成果类型: Article
• 署名作者: Nylen, Jessica A.; Wangerin, Daniel D.; Zehms, Karla M.
• 署名单位: University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-025-09896-2
• 发表日期: 2025
• 页码: 2264-2311
• 关键词: control material weaknesses; corporate governance; ceo turnover; AGENCY COSTS; acquisitions; earnouts; CONSEQUENCES; revelation; mergers; RISK

摘要

This study examines whether auditor KAM disclosures about M&A transactions predict future performance outcomes. We find that auditors make more M&A KAM disclosures when M&A transactions are larger, involve targets with greater information asymmetry, and are subject to greater overpayment risk. When auditors disclose M&A KAMs in the acquisition year, we find an increased risk of larger goodwill impairments and that the association between acquired goodwill and changes in companies' subsequent operating performance are significantly lower compared to when auditors do not issue an M&A KAM. We also find that the likelihood of forced CEO turnover is incrementally higher when subsequent operating performance is poor and auditors issue an M&A KAM compared to when they do not. Collectively, our findings suggest that these auditor disclosures reflect uncertainty that predicts weak post-acquisition performance and forced CEO turnover, incremental to other indicators of failed acquisition strategies.