Common Auditors and Cross-Country M&A Transactions
41 Pages Posted: 20 May 2016 Last revised: 8 Apr 2017
Date Written: April 1, 2017
Using a comprehensive sample of cross-country mergers and acquisitions for the period 2000 to 2014 we examine the effect of common auditors on the efficiency of cross-country M&A transactions. We predict that the use of common auditors reduces uncertainty, resulting in higher M&A efficiency. We find that this common-auditor effect results in a positive market reaction to the M&A announcement, lower premium and greater increase in return on assets following the M&A transaction. Further, we find that these effects are more pronounced the greater the M&A transaction uncertainty and when the accounting standards of the transacting parties differ.
Keywords: Auditors; Information transfer; M&As
JEL Classification: D82; D83; M41
Suggested Citation: Suggested Citation