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The ‘Independence’ of Expert Opinions in Corporate Takeovers: Agreeing With Directors’ Recommendations
Author(s) -
Bugeja Martin
Publication year - 2005
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.0306-686x.2005.00650.x
Subject(s) - auditor independence , independence (probability theory) , audit , accounting , auditor's report , expert opinion , quarter (canadian coin) , business , context (archaeology) , going concern , external auditor , capital market , internal audit , finance , joint audit , medicine , paleontology , statistics , mathematics , archaeology , biology , intensive care medicine , history
The impact of non‐audit services on auditor independence has been the recent focus of regulators worldwide. Using expert reports provided in Australian takeovers, this study investigates a context where the audit independence issue is reversed. As approximately a quarter of expert reports are prepared by the target firm's auditor, concerns have been expressed over the independence of the opinion provided. This paper finds that, relative to other experts, there is no difference in the rate at which experts with other business dealings with the target, including the target's auditor, provide an opinion that agrees with that of directors. However, the capital market reaction around the release of the report indicates that reports produced by auditors are viewed as non‐independent.