The author is from the University of Sydney. He wishes to acknowledge the financial support received through the RJ Chamber's PhD Scholarship of the University of Sydney and the CPA/ICAA/AFAAZ PhD Scholarship. This paper has benefitted from comments of an anonymous referee, Terry Walter, Raymond Da Silva Rosa and participants of the AFAAZ 2004 annual conference.
The ‘Independence’ of Expert Opinions in Corporate Takeovers: Agreeing With Directors’ Recommendations
Article first published online: 16 NOV 2005
Journal of Business Finance & Accounting
Volume 32, Issue 9-10, pages 1861–1885, November 2005
How to Cite
Bugeja, M. (2005), The ‘Independence’ of Expert Opinions in Corporate Takeovers: Agreeing With Directors’ Recommendations. Journal of Business Finance & Accounting, 32: 1861–1885. doi: 10.1111/j.0306-686X.2005.00650.x
- Issue published online: 16 NOV 2005
- Article first published online: 16 NOV 2005
- (Paper received June 2004, revised and accepted February 2005)
- independent expert reports;
- fairness opinions;
- auditor independence;
- non-audit services
Abstract: 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.