The Role of Auditors in Merger and Acquisition Completion Time
15 Pages Posted: 23 Oct 2018
Date Written: November 2018
Using a sample of 664 merger and acquisition (M&A) transactions and office‐level audit data, this study investigates the role of auditors in M&A completion time. We find that having a common auditor for both acquirer and target firms in M&A transactions increases the completion time of such transactions because the exposure to higher litigation and reputational costs outweighs the information‐access advantage of common auditors. However, auditors' past experience in M&A transactions helps reduce completion time and costs. These results are robust to having Big N auditors at both ends as well as to various acquirer, target, and deal characteristics.
Keywords: Auditors, auditor experience, common auditors, completion time, mergers & acquisitions
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