“Auditor Industry Expertise and Merger and Acquisition Outcomes” by Mr. Seung Uk CHOI
Mr. Seung Uk CHOI
Ph.D. Candidate in Accounting
Korea University Business School
In this study, I examine whether auditor industry expertise impacts merger and acquisition outcomes. The results show that auditor industry expertise is significantly associated with deal outcomes when the acquiring firm auditor has expertise in both acquirer and target firm industries. Importantly, I find that while sharing an expert auditor is significantly associated with deal outcomes, sharing a non-expert auditor is not. This finding indicates that although auditors are not specifically contracted to provide services to their clients in mergers, expert auditors can significantly impact deal outcomes. I also find that the effect of sharing an expert auditor is stronger in intra-industry deals, and that this expert auditor effect is more pronounced in mergers with a target with greater uncertainty, but that the relationship is concentrated in the period before the 2002 Sarbanes-Oxley Act.