Auditor choice in reverse mergers: Evidence from China

IF 5.5 3区管理学 Q1 BUSINESS, FINANCE

British Accounting Review Pub Date : 2024-03-01 DOI:10.1016/j.bar.2023.101243

Yanchun Xia , Sonia Wong , Qingquan Xin

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引用次数: 0

Abstract

Using data from 123 reverse mergers (RMs) in China, this study investigates the determinants and economic consequences of auditor choice in RMs. We find that the choice of a new auditor instead of the incumbent auditor is not related to auditor competence but to the relative bargaining power of RM firms and publicly listed firms (shell firms), and that the probability of choosing new auditors is higher when RM firms have more bargaining power relative to shell firms. We also find that hiring new auditors in the RM is associated with a higher valuation of injected assets and higher pre-listing income-increasing discretionary accruals in RM firms. Furthermore, post-merger firms exhibit drops in accounting performance and firm value and are more likely to restate their financial reports within 3 years of listing when new auditors are appointed in RMs. Finally, the cross-sectional test shows that this effect mainly exists in the context of RMs where the newly appointed auditor is a non-Big 10 auditor and a non-specialist auditor. Overall, our results emphasize the role of RM firms and shell firms in auditor choice for RMs and highlight the implications of such a joint decision on investor protection.

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反向并购中审计师的选择：来自中国的证据

本研究利用中国 123 起反向并购（RM）的数据，探讨了反向并购中审计师选择的决定因素和经济后果。我们发现，选择新审计师而不是现任审计师与审计师的能力无关，而是与反向并购企业和上市公司（壳公司）的相对议价能力有关，当反向并购企业相对壳公司具有更强的议价能力时，选择新审计师的概率更高。我们还发现，在RM中聘用新审计师与RM公司对注入资产的更高估值和更高的上市前收入增加型全权应计制相关。此外，并购后的公司在会计业绩和公司价值方面都会有所下降，而且在RM任命新审计师时，更有可能在上市后3年内重述财务报告。最后，横截面检验表明，这种效应主要存在于新任命的审计师为非十大审计师和非专业审计师的 RM 中。总之，我们的研究结果强调了RM公司和壳公司在RM公司审计师选择中的作用，并突出了这种联合决策对投资者保护的影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

British Accounting Review BUSINESS, FINANCE-

CiteScore

8.60

自引率

3.90%

发文量

审稿时长

76 days

期刊介绍： The British Accounting Review*is pleased to publish original scholarly papers across the whole spectrum of accounting and finance. The journal is eclectic and pluralistic and contributions are welcomed across a wide range of research methodologies (e.g. analytical, archival, experimental, survey and qualitative case methods) and topics (e.g. financial accounting, management accounting, finance and financial management, auditing, public sector accounting, social and environmental accounting; accounting education and accounting history), evidence from UK and non-UK sources are equally acceptable.