Fair value opinion shopping |
Posted on:2011-02-15 | Degree:Ph.D | Type:Dissertation |
University:University of South Carolina | Candidate:Salzsieder, Leigh | Full Text:PDF |
GTID:1449390002950707 | Subject:Business Administration |
Abstract/Summary: | |
This study reports the results of a series of experiments designed to provide empirical evidence related to fair value opinion shopping. Experiment 1 provides initial evidence that managers fair value opinion shop for external valuation professionals in the current regulatory environment. Further, the results of Experiment 1 suggest that informing managers that they are required to disclose to the board and/or auditor the fact that they obtained multiple opinions generally deters managers from fair value opinion shopping for personal benefits, but not for shareholder benefits. Results of Experiment 2 show that a regulatory change requiring boards to approve or reject a manager's request to seek a second fair value opinion will serve as an effective control against fair value opinion shopping. However, results of Experiment 2 show that boards are more likely to approve a manager's request to fair value opinion shop when it is transparently disclosed. Experiment 3 shows that a regulatory change requiring firms to inform their auditor when they obtain multiple fair value opinions results in increased audit procedures and a reduction in auditors' beliefs about the reliability of the second external valuation professional's fair value opinion. |
Keywords/Search Tags: | Fair value, Experiment, Results, External valuation, Regulatory change requiring |
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