Authors: LIYAN WANG1, JIDONG ZHANG2 and JING HAN3

Abstract

This study investigates the role of accountants in merger and acquisition (M&A) transactions, focusing on acquirers' and targets' decisions to hire accountants, joint engagements with the same accountant, and the influence of high-quality CPA firms. The findings indicate that acquirers are more likely to hire accountants for larger deals, and such engagement is positively correlated with post-merger value. However, the quality of the accounting firm does not significantly impact this outcome. However, when target firms hire accountants, post-merger value tends to decrease, and this negative effect is greater when the accountant is from a Big 4 firm. Furthermore, when both the acquirer and target engage the same accountant, it is associated with lower post-merger value, and this negative effect is particularly significant when the shared accountant is from a Big 4 firm. Our descriptive evidence also highlights an interdependence in accountants' hiring decisions: targets are more likely to engage accountants if acquirers do not. When acquirers do hire accountants, targets have a strong preference for Big 4 firms. Our findings have significant implications for studies on M&A and professional ethics.

Keywords: The Role of CPA Firm, M&A, the Same Accountants, Due Diligence Care, Professional Ethics.

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