Knowledge Spillover and Accounting Firms’ Competitive Strength in the M&A Advisory Market
|Speaker:||Pawel Bilinski, Cass Business School|
|Date:||Wednesday 31 May 2017|
|Time:||14:30 - 16:00|
|Location:||Kolade Teaching Room, Building One|
Accounting firms are best known for audit services, however, their capital market influence goes far beyond their auditor role. This paper provides evidence on knowledge spillover from audit to M&A advisory services offered by accounting firms. Knowledge spillover aids in estimating the target’s value and translates into high service quality offered by accounting firms exhibited in terms of higher acquirer announcement-period stock returns and lower likelihood of overpaying for the target. Bidders recognize value offered by accounting firms and reward them with repeat business, which helps explain why Thomson Reuters ranks accounting firms among top global advisors, particularly in the mid- and low-end of the M&A market.