Do Critical Audit Matters Provide Decision-Relevant Information to Investors? Evidence from Merger and Acquisition Announcements
Do Critical Audit Matters Provide Decision-Relevant Information to Investors? Evidence from Merger and Acquisition Announcements
Date
2022
Authors
Buslepp, William
Abbott, Lawrence
Contributor
Advisor
Department
Instructor
Depositor
Speaker
Researcher
Consultant
Interviewer
Annotator
Journal Title
Journal ISSN
Volume Title
Publisher
Volume
Number/Issue
Starting Page
Ending Page
Alternative Title
Abstract
PCAOB AS 3101 requires the auditor to communicate any critical audit matters (CAMs), identified during the planning or performance of the audit, in the audit report. Prior research has investigated the informativeness of CAM disclosures using short window, event study methodologies centered around the initial CAM disclosure in the 10-K and finds minimal evidence that CAMs alter investors’ decisions. We depart from the extant research to investigate whether and to what extent a specific CAM – the business combination CAM – influences investors’ perceptions of mergers and acquisition news. We predict and find that investors react more negatively to merger and acquisition announcements when the audit report preceding the announcement contains a business combination CAM. Our results suggest that CAMs provide decision-relevant information to investors about the risks involved in the acquisition, which is used to value subsequent transactions.
Description
Keywords
PCAOB,
Critical Audit Matters,
Mergers and Acquisitions
Citation
Extent
Format
Geographic Location
Time Period
Related To
Table of Contents
Rights
Rights Holder
Local Contexts
Collections
Email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.