Importing Accounting Quality: The Case of Foreign Reverse Mergers

Givoly, Dan; Hayn, Carla; Lourie, Ben

doi:10.2139/ssrn.2183724

Cited by 26 publications

(26 citation statements)

References 62 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We identify reverse merger firms from January 1, 2001 to April 30, 2015, using a proprietary database from DealFlow Media. Our data source is consistent with the prior reverse merger literature (Givoly, Hahn, and Lourie ; Pollard ; Lee et al. ; Asquith and Rock ).…”

Section: Sample Selectionsupporting

confidence: 90%

See 1 more Smart Citation

The Impact of Litigation Risk on Auditor Pricing Behavior: Evidence From Reverse Mergers

Abbott

Gunny

Pollard

2017

Contemporary Accting Res

View full text Add to dashboard Cite

We use reverse mergers to examine the impact of litigation risk on audit fees. In a reverse merger, a private company merges with a public company, and the private company's management takes over the resulting publicly traded firm. Reverse mergers create a unique test setting to provide estimates on the litigation risk premium because, while the litigation risk for formerly private firms whose equity becomes publicly traded increases, the remaining auditee-and auditor-related characteristics remain virtually unchanged. We document a litigation risk premium of approximately 27 percent. Moreover, we document that equity dispersion impacts the audit fee pricing of litigation risk and this relation is dramatically magnified in the publicly traded realm. Finally, we find that institutional investors demand higher audit effort in the form of higher audit fees in both the private-and public-equity settings.

show abstract

Section: Sample Selectionsupporting

confidence: 90%

“…Consistent with much of the prior literature (Givoly et al. ; Pollard ; Lee et al. ), many of these transactions ( n = 1,549) do not have sufficient audit fee or financial statement data.…”

Section: Sample Selectionsupporting

confidence: 57%

The Impact of Litigation Risk on Auditor Pricing Behavior: Evidence From Reverse Mergers

Abbott

Gunny

Pollard

2017

Contemporary Accting Res

View full text Add to dashboard Cite

show abstract

“…OFCs to upgrade the quality of their legal, regulatory, and disclosure environments (International Monetary Fund, 2006 OFCs were heavily involved in the US securitization boom which fed the recent financial crisis (Lane and Milesi-Ferretti, 2010 13 See Darrough,, Huang, and Zhao (2012), Jindra, Voetmann, and Walkling (2012), and Givoly, Hayn, and Lourie (2012) for further evidence on Chinese firms listed in the US and, in particular, on the associations between reverse listing and firm quality.…”

Section: Offshore Financial Centersmentioning

confidence: 99%

Incorporation in Offshore Financial Centers: Naughty or Nice?

Bailey

Liu

2013

SSRN Journal

View full text Add to dashboard Cite

We study associations between measures of firm value and quality and the firm's choice of legal and regulatory environment though incorporation in an offshore financial center. Preliminary empirical results suggest that incorporation in such a jurisdiction, or switching incorporation to one, is associated with lower value as measured by Tobin's q.This effect varies with the quality of the firm's home country environment and the offshore domicile it selects.

show abstract

“…First, to date prior and concurrent accounting studies in this area focus mainly on foreign RMs (especially Chinese RMs), and only touch U.S. RMs versus U.S. IPOs very briefly. For example, Givoly et al (2012) only performed univariate t tests without including any control variables. They acknowledge that their study does not examine how auditing quality, the extent of ownership concentration or governance structure affect earnings quality of RM firms.…”

Section: Introductionmentioning

confidence: 99%

“…Chen et al (2012) find that Chinese firms that go public in the U.S. via RMs have lower financial reporting quality and are more likely to restate their financial statements than other U.S. IPO companies. Givoly et al (2012) compare the earnings quality of foreign RM firms against U.S. domestic firms within the same industries. They measure earnings quality in terms of accruals, the timeliness of loss recognition, the informativeness of earnings announcements, and the weight assigned by investors to accounting numbers in stock valuation.…”

Section: Introductionmentioning

confidence: 99%