The Role of Accounting Quality in the M&A Market

Marquardt, Carol A.; Zur, Emanuel

doi:10.2139/ssrn.1725020

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The Role of Accounting Quality in the M&A Market

Management Science, Forthcoming

40 Pages Posted: 15 Dec 2010 Last revised: 28 Oct 2013

See all articles by Carol A. Marquardt

Carol A. Marquardt

City University of New York (CUNY) – Baruch College

Emanuel Zur

University of Maryland - Robert H. Smith School of Business

Date Written: October 27, 2013

Abstract

We examine the role of target firms’ accounting quality in the merger and acquisition (M&A) process. We predict that target firm accounting quality will be positively associated with (1) the likelihood that the deal will be structured as a negotiation rather than as an auction; (2) the speed with which the deal reaches final resolution; and (3) the likelihood that the proposed deal is ultimately completed. Our empirical evidence is consistent with these predictions. These results complement and extend existing findings on target firm accounting quality and provide new evidence that financial accounting quality relates positively to the efficient allocation of the economy’s capital resources.

Keywords: Mergers and Acquisitions, Accruals Quality, Auction, Negotiation

JEL Classification: G34, M41

Suggested Citation: Suggested Citation

Marquardt, Carol and Zur, Emanuel, The Role of Accounting Quality in the M&A Market (October 27, 2013). Management Science, Forthcoming , Available at SSRN: https://ssrn.com/abstract=1725020 or http://dx.doi.org/10.2139/ssrn.1725020