The Impact of Shared Auditors and Same Signing Auditors on Merger and Acquisition Decision-making

Abstract

This research examines how shared auditors and signing auditors influence the decision-making process in M&A. Using a comprehensive sample of Chinese A-share market M&A transactions from 2004 to 2020, we analyze how sharing the same audit firm or signing auditor influences the likelihood of completing an acquisition. The regression results reveal that firms with common auditors are more likely to achieve successful acquisitions. The effect is particularly pronounced for large acquirers, non-state-owned enterprises, cross-industry M&As, cross-province M&As, and those involving non-Big 4 audit firms. These findings are robust to various model specifications and adjustments. This paper extends the literature by demonstrating the dual-level (firm-level and individual-level) role of auditors as information intermediaries in M&A transactions. The results suggest that organizations and audit teams should consider the potential benefits of shared auditors in enhancing the quality and success of M&A deals. JEL Classification: M42