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Do Private Company Targets that Hire Big 4 Auditors Receive Higher Proceeds?


  • Accepted by Michel Magnan. We have benefited from the comments of Wayne Gelb, Roger Grabowski, John Hand, Doug Hanna, Lee-Seok Hwang, Bin Ke, Alex Keung, Hai Lu, Per Olsson, Bruce Roher, Suresh Radhakrishnan, Antoinette Schoar, Rex Thomson, Doug Twitchell, Rodrigo Verdi, T. J. Wong, Cheong Yi, Paul Zarowin, and workshop participants at FARS 2007 Conference, AAA and CAAA 2007 Annual conferences, 2007 JCAE Conference, 2008 Korean Accounting Association Distinguished Professor Seminar Series, National Association of Certified Valuation Analysts 15th Annual Conference, November 2008 Round Table Discussion at Duff and Phelps, November 2008 Valuation Study Group (VSG) Discussion at New York Palace Hotel, Chinese University of Hong Kong, Chon-Nam University, MIT, Shanghai University of Finance and Economics, Southern Methodist University, University of Connecticut, University of Toronto, and Washington University. We thank Business Valuation Resources for the academic use of their Pratt’s Stats®Private Transaction Database. Roger Grabowski, Alex Keung, and Bruce Roher were particularly helpful in the initiation of this project by providing in-depth institutional knowledge of how private firms are valued in practice. Finally, our thanks to Michel Magnan (Chief Editor) and two anonymous reviewers for their excellent suggestions. We gratefully acknowledge the financial support of a 2005 CICA/CAAA research grant, the Social Sciences and Humanities Research Council of Canada, the Guilford Glazer School of Business and Management at Ben-Gurion University, the DeGroote School of Business at McMaster University, and the Joseph L. Rotman School of Management at the University of Toronto. Gordon Richardson is grateful to KPMG for their financial support. Part of the work on this article was completed while Gus De Franco was a Visiting Assistant Professor at the Sloan School of Management, MIT. All errors remain our responsibility.