PCAOB international inspections and Merger and Acquisition outcomes

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

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    11 Citations (Scopus)

    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 languageEnglish
    Article number101318
    JournalJournal of Accounting and Economics
    Volume70
    Issue number1
    DOIs
    Publication statusPublished - Aug 2020

    Scopus Subject Areas

    • Accounting
    • Finance
    • Economics and Econometrics

    User-Defined Keywords

    • Audit quality
    • Merger and acquisition
    • PCAOB international inspection

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