PCAOB international inspections and Merger and Acquisition outcomes

Yongtae Kim, (Nancy) Su, Lixin, (Stephen) Zhou, Gaoguang and (Kevin) Zhu, Xindong

Journal of Accounting and Economics, 2020, vol. 70, issue 1

Abstract: This study examines how PCAOB international inspections of non-U.S. auditors affect international Merger and Acquisition (M&A) outcomes. We find that clients of inspected auditors are more likely to become acquisition targets after the public disclosure of auditor's inspection report. We also find that deal completion is more likely and deal announcement returns are higher if deals involve targets with auditors for which inspection reports are available. Engagement deficiencies and unremediated quality control deficiencies identified in inspection reports weaken the positive effect of PCAOB oversight on M&A outcomes. Collectively, our results suggest that PCAOB oversight reduces information uncertainty in M&A deals.

Keywords: PCAOB international inspection; Audit quality; Merger and acquisition (search for similar items in EconPapers)
JEL-codes: G34 M41 M49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:70:y:2020:i:1:s0165410120300203

DOI: 10.1016/j.jacceco.2020.101318

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