Journal of Accounting and Economics Vol. 40 No. 1-3 2005
Acquirers’ abnormal returns and the non-Big 4 auditor clientele effect
Abstract
I analyze the effect of auditor choice on acquirers’ values around merger announcements and the factors affecting the interaction between auditor size and the market reaction to merger announcements. I find that acquirers audited by non-Big 4 accounting firms outperform those audited by Big 4 firms. This effect is more pronounced when the targets are privately held and when the likelihood of the auditors playing a prominent advisory role increases. While the largest auditing firms are usually assumed to offer superior services, the study suggests that smaller firms have a comparative advantage in assisting their clients in merger transactions.
- DOI
- 10.1016/j.jacceco.2005.03.001
- Volume
- 40
- Issue
- 1-3
- Pages
- 75-99
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref