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.
| Original language | English |
|---|---|
| Article number | 101318 |
| Journal | Journal of Accounting and Economics |
| Volume | 70 |
| Issue number | 1 |
| Online published | 3 Apr 2020 |
| DOIs | |
| Publication status | Published - Aug 2020 |
Bibliographical note
Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).Research Keywords
- Audit quality
- Merger and acquisition
- PCAOB international inspection
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