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 journalArticlepeer-review

1 Citation (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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