What is the Role of Auditing Firm in M&A Activity?

Abstract

Accounting firms in M & A activities, the status and role has long been a topic of concern to regulatory agencies and corporate managers. Collected from China's capital market in the 2005-2006 M & A cases as samples, analysis of accounting firms in merger and acquisition activity in the status and the possible role of, and in particular contrast to the international Big Four accounting firms and the domestic top ten accounting firms in the M & A activity in the play. The results showed that, if the parties choose to deal with an accounting firm, for M & A side value of the company after the merger had no significant effect. However, if the international Big Four accounting firms as a merger of both accounting firms, accounting firms the choice of this method for the merger parties’ post-merger value of the company has a significant positive effect. Domestic top ten accounting firms accounting firms are chose, this means the choice of accounting firms for mergers and acquisitions side of the ex post value of the company had no significant effect. It is believed that the international Big Four accounting firms accounting firms as a mergers and acquisitions of both sides when compared to the domestic top ten accounting firms in the mergers and acquisitions play a different role, so it impacts the redistribution of interest in M & A activity. This reasoning is in line with the sociology of social structure theory, if third-party accounting firm have different resources, they have the opportunity to use their social networks in the enterprise in a favorable position and affect the network distribution of the results of the various business interests.

Keywords: M&A, auditing firm, firm value

JEL Classification: M41