王泰昌劉嘉雯臺灣大學高偉娟2007-11-282018-06-292007-11-282018-06-292007http://ntur.lib.ntu.edu.tw//handle/246246/61691To investigate the stock price reactions of clients to the KPMG, Ernst & Young, and Deloitte & Touche mergers in the United States, this study adopts the event study methodology proposed by Chandra and Balachandran (1990) a portfolio return in order to conduct a time series analysis. In addition, this study uses a cross-sectional analysis to examine whether the stock price reactions of clients to the mergers are consistent with agency theory and the insurance hypothesis. The results demonstrate that most of the stock price reactions of clients to each merger are not significantly positive until the merger is almost certain. Based on the cross-sectional analysis, the results show that the stock price reactions of larger clients are more significantly positive only for the KPMG merger. The findings imply that only the KPMG merger resulted in increasing the value of the firm for the clients due to better audit quality. However, clients’ financial conditions are negatively associated with clients’ stock price reactions to each merger, which is consistent with the insurance hypothesis. The findings suggest that financially distressed clients benefit more from the mergers of their accounting firms.1. Introduction 1 2. Literature Review 4 2.1 Accounting Firm Mergers 4 2.2 Agency Theory 7 2.3 The Insurance Hypothesis 10 3. Methodology 14 3.1 Research Hypothesis 14 3.2 Sample 18 3.2.1 Event dates regarding the mergers 18 3.2.2 Sample selection 27 3.3 Empirical Model 30 3.3.1 Univariate Analysis 30 3.3.2 Multiple Regression 32 4. Empirical Results 36 4.1 Results of the Univariate Analysis 36 4.1.1 Results regarding the Peat & KMG merger dates 36 4.1.2 Results regarding the Ernst & Young merger dates 46 4.1.3 Results regarding the Deloitte & Touche merger dates 53 4.2 Results of Multiple Regression 62 5. Conclusions and Suggestions 77 References 80 1. Introduction 1 2. Literature Review 4 2.1 Accounting Firm Mergers 4 2.2 Agency Theory 7 2.3 The Insurance Hypothesis 10 3. Methodology 14 3.1 Research Hypothesis 14 3.2 Sample 18 3.2.1 Event dates regarding the mergers 18 3.2.2 Sample selection 27 3.3 Empirical Model 30 3.3.1 Univariate Analysis 30 3.3.2 Multiple Regression 32 4. Empirical Results 36 4.1 Results of the Univariate Analysis 36 4.1.1 Results regarding the Peat & KMG merger dates 36 4.1.2 Results regarding the Ernst & Young merger dates 46 4.1.3 Results regarding the Deloitte & Touche merger dates 53 4.2 Results of Multiple Regression 62 5. Conclusions and Suggestions 77 References 80 TABLES Table 1 accounting firms ranked by audit fees in the U.S. from 1983 to 1990 (in million dollars) a 15 Table 2 basic information of accounting firms in the U.S. in 1985 a 15 Table 3 News reporting accounting firm mergers 20 Table 4 News reporting accounting firm mergers 28 Table 5 Sample size of each accounting firms’ clients for the multiple regression 29 Table 6 Daily abnormal returns (ARs) of KPMG’s clients during the merger between KMG and Peat 40 Table 7 Cumulative Abnormal Return (CARs) of KPMG’s clients during the merger between KMG and Peat 43 Table 8 Daily Abnormal Returns (ARs) of Ernst & Young’s clients during the merger between Ernst & Whinney and Arthur Young 49 Table 9 Cumulative Abnormal Returns (CARs) of Ernst & Young’’s clients during the merger between Ernst & Whinney and Arthur Young 51 Table 10 Daily Abnormal Returns (ARs) of Deloitte Touche’s clients during the merger between Deloitte and Touche 56 Table 11 Cumulative Abnormal Return (CAR) of Deloitte Touche’s clients during the merger between Deloitte and Touche 59 Table 12 Descriptive Statistics for Accounting Firm Merger Events 63 Table 13 Correlation Matrix 65 Table 14 Multiple Regression Results for Accounting Merger Events 69 Table 15 Multiple Regression Results for Accounting Merger Events 73en-US會計師事務所合併客戶股價反應代理理論保險假說accounting firm mergersstock price reactionsagency theorythe insurance hypothesisthesis