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An empirical analysis of factors related to auditor switching after corporate takeovers


  • Luypaert, Mathieu

    () (Vlerick Leuven Gent Management School en KU Leuven)

  • Van Caneghem, Tom

    () (Hogeschool-Universiteit Brussel (HUB))


In case of a takeover, the acquiring firm has to choose whether to retain the acquired firm’s incumbent auditor or to switch to its own auditor. In the current paper, we explore the drivers of auditor switching by the acquired firm after a takeover among a sample of Belgian takeovers. Employing binary probit regression analysis, we relate different types of variables borrowed from the auditing literature (e.g., similarity of activities between the acquired and the acquiring firm, auditor size, type of audit opinion, agency variables) to the auditor change decision. Our results confirm prior evidence indicating that the majority of acquired firms switch to the auditor of the acquiring firm after the takeover. Whereas prior results are inconclusive, our results suggest that similarity of activities between the acquired and the acquiring firm does not affect the decision to replace the acquired firm’s auditor. However, our results indicate that the likelihood of an auditor switch is significantly higher when the acquiring firm is listed. Agency variables (at both the acquired and the acquiring firm level) are also found to affect the auditor change decision.

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  • Luypaert, Mathieu & Van Caneghem, Tom, 2012. "An empirical analysis of factors related to auditor switching after corporate takeovers," Working Papers 2012/03, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  • Handle: RePEc:hub:wpecon:201203

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    1. ReVelle, C.S. & Eiselt, H.A. & Daskin, M.S., 2008. "A bibliography for some fundamental problem categories in discrete location science," European Journal of Operational Research, Elsevier, vol. 184(3), pages 817-848, February.
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    takeover; auditor switch; auditor choice; agency costs;

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