The Role of Similar Accounting Standards in Cross-Border Mergers and Acquisitions

Francis, JR; Huang, SX; Khurana, IK

The Role of Similar Accounting Standards in Cross-Border Mergers and Acquisitions

Francis, JR Huang, SX Khurana, IK

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Publication Type:: Journal Article
Citation:: Contemporary Accounting Research, 2016, 33 (3), pp. 1298 - 1330
Issue Date:: 2016-01-01

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Field	Value	Language
dc.contributor.author	Francis, JR	en_US
dc.contributor.author	Huang, SX	en_US
dc.contributor.author	Khurana, IK	en_US
dc.date.issued	2016-01-01	en_US
dc.identifier.citation	Contemporary Accounting Research, 2016, 33 (3), pp. 1298 - 1330	en_US
dc.identifier.issn	0823-9150	en_US
dc.identifier.uri	http://hdl.handle.net/10453/121951
dc.description.abstract	© CAAA This study investigates whether differences in accounting standards across countries create information costs that inhibit firms from investing in foreign markets. Using the frequency and dollar magnitude of cross-border mergers and acquisitions (M&As) from 32 countries over the period 1998–2004, we find that the aggregate volume of M&A activity across country pairs is larger for pairs of countries with similar Generally Accepted Accounting Principles (GAAP), and that this increased volume of M&A activity is driven by target countries that also have strong enforcement. We also find that the 2005 mandatory adoption of International Financial Reporting Standard (IFRS) attracted more cross-border M&As among IFRS-adopting countries, and that this increase in M&A activity within the IFRS countries is more pronounced for country pairs with low similarity in GAAP in the pre-IFRS adoption period. Overall, our results highlight the role of accounting standards and enforcement in shaping cross-border M&A activity.	en_US
dc.relation.ispartof	Contemporary Accounting Research	en_US
dc.relation.isbasedon	10.1111/1911-3846.12176	en_US
dc.subject.classification	Accounting	en_US
dc.title	The Role of Similar Accounting Standards in Cross-Border Mergers and Acquisitions	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	33	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	3	en_US
pubs.publication-status	Published	en_US
pubs.volume	33	en_US

Abstract:

© CAAA This study investigates whether differences in accounting standards across countries create information costs that inhibit firms from investing in foreign markets. Using the frequency and dollar magnitude of cross-border mergers and acquisitions (M&As) from 32 countries over the period 1998–2004, we find that the aggregate volume of M&A activity across country pairs is larger for pairs of countries with similar Generally Accepted Accounting Principles (GAAP), and that this increased volume of M&A activity is driven by target countries that also have strong enforcement. We also find that the 2005 mandatory adoption of International Financial Reporting Standard (IFRS) attracted more cross-border M&As among IFRS-adopting countries, and that this increase in M&A activity within the IFRS countries is more pronounced for country pairs with low similarity in GAAP in the pre-IFRS adoption period. Overall, our results highlight the role of accounting standards and enforcement in shaping cross-border M&A activity.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/121951