M&A Performance Commitments And Audit Opinion Shopping

Mergers and acquisitions are important ways for companies to grow and develop.With the gradual improvement of China’s capital market infrastructure,the number and scale of mergers and acquisitions are increasing.Performance commitments are often used to reduce the information asymmetry by both parties in mergers and acquisitions activities.However,in order to achieve performance commitments,some listed companies choose to adopt a series of performance manipulation methods to"accurately meet the performance commitments",which has seriously damaged the information quality of financial reports.In order to conceal their"whitewashing"behavior,those listed companies will adopt the means of audit opinions shopping to ensure that the company’s financial reports obtain standard unqualified opinions issued by the auditors.This article takes the data of listed companies that have undergone M&A activities and signed performance commitments from 2011 to 2019 as the research sample to comprehensively examine the impact of M&A performance commitments on the audit opinion shopping behavior of listed companies.The research results show that:During the sample period,Chinese listed companies have successfully realized the audit opinions shopping by changing auditors,and M&A performance commitments will strengthen the audit opinion shopping behavior.This conclusion is still valid after the robustness test.Further research in this article found that when the performance commitments adopt share compensation methods,when the parties of the transaction are not related,and when the listed company is state-owned,M&A performance commitments have a more obvious role in strengthening the audit opinion shopping behavior of listed companies.The research in this article has enriched the research on the behavior of listed companies,the economic consequences of M&A performance commitments and the factors affecting audit opinion shopping.It also provides a realistic reference for investors to rationally view performance commitments,for regulators to improve relevant policies,and for accounting firms to strengthen audit quality control.