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- Title
Auditor Reverse-Merger Expertise: Evidence from Chinese Reverse-Merger Companies.
- Authors
Juan Mao; Qin Jennifer Yin
- Abstract
This study investigates if hiring auditors with Chinese reverse-merger expertise affected 182 Chinese companies that executed reverse mergers with U.S. shell companies from 2003 to 2011 to become U.S. publicly traded companies (Chinese reverse-merger companies, or CRM companies). We find that CRM companies that employ CRM-expert auditors pay higher audit fee premiums, and are more likely to up-list to national exchanges, when they are compared to CRM companies with non-CRM-expert auditors. Additional analyses suggest that clients of CRM experts also are more likely to file annual financial reports on time, but CRM-expert auditors are not associated with fewer misstatements in financial reporting or continued trading on national exchanges. This suggests that CRM-specialist auditors help clients navigate regulatory requirements for up-listing, but they do not achieve improved financial reporting quality.
- Subjects
AUDITORS; AUDITING; REVERSE mergers; SHELL corporations; PUBLIC companies
- Publication
Auditing: A Journal of Practice & Theory, 2017, Vol 36, Issue 4, p115
- ISSN
0278-0380
- Publication type
Article
- DOI
10.2308/ajpt-51690