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Legal supervision of audit practice in corporate takeovers

Auditing services are active throughout corporate takeover process. Audit issues not only affect the nature, efficiency and consequences of takeovers, but also matter the quality and social effects of corporate development after the successful reorganization. This paper aims to enhance the audit qua...

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Main Authors: Kai, Liu, Heng, Li
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2022
Online Access:http://journalarticle.ukm.my/19222/1/53700-184377-1-PB.pdf
http://journalarticle.ukm.my/19222/
https://ejournal.ukm.my/juum/issue/view/1516
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spelling my-ukm.journal.192222022-08-04T07:48:54Z http://journalarticle.ukm.my/19222/ Legal supervision of audit practice in corporate takeovers Kai, Liu Heng, Li Auditing services are active throughout corporate takeover process. Audit issues not only affect the nature, efficiency and consequences of takeovers, but also matter the quality and social effects of corporate development after the successful reorganization. This paper aims to enhance the audit quality in the takeover process, and further improve the structure, productivity and social responsibility of takeover parties. Qualitative analysis method and case study are adopted in this paper to investigate the legal issues on audit involved in the takeover process, and explores their fundamental reasons and negative effects on the development of companies and society. This paper finds that since the acquiring companies need to master the comprehensive information of target companies, they incline to choose the audit firms associated with the target companies. Those firms have the opportunity to collude with the target companies and may damage the takeover performance by hiding decision-making power or even falsifying financial data1. In addition, in order to defeat other potential competitors, acquiring companies need to review the financial records and assess the key personnel of target companies within a limited time. They may miss out some technical issues of corporate governance at the stage of pre-takeover due diligence.2 Therefore, this paper suggests that takeover parties adopt shared audit. As the information intermediary, shared audit could effectively eliminate the illegal acts caused by the collusion among auditors and auditees, convey accurate information and promote higher-quality takeovers. Penerbit Universiti Kebangsaan Malaysia 2022 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/19222/1/53700-184377-1-PB.pdf Kai, Liu and Heng, Li (2022) Legal supervision of audit practice in corporate takeovers. Jurnal Undang-Undang dan Masyarakat, 30 . pp. 39-50. ISSN 1394-7729 https://ejournal.ukm.my/juum/issue/view/1516
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description Auditing services are active throughout corporate takeover process. Audit issues not only affect the nature, efficiency and consequences of takeovers, but also matter the quality and social effects of corporate development after the successful reorganization. This paper aims to enhance the audit quality in the takeover process, and further improve the structure, productivity and social responsibility of takeover parties. Qualitative analysis method and case study are adopted in this paper to investigate the legal issues on audit involved in the takeover process, and explores their fundamental reasons and negative effects on the development of companies and society. This paper finds that since the acquiring companies need to master the comprehensive information of target companies, they incline to choose the audit firms associated with the target companies. Those firms have the opportunity to collude with the target companies and may damage the takeover performance by hiding decision-making power or even falsifying financial data1. In addition, in order to defeat other potential competitors, acquiring companies need to review the financial records and assess the key personnel of target companies within a limited time. They may miss out some technical issues of corporate governance at the stage of pre-takeover due diligence.2 Therefore, this paper suggests that takeover parties adopt shared audit. As the information intermediary, shared audit could effectively eliminate the illegal acts caused by the collusion among auditors and auditees, convey accurate information and promote higher-quality takeovers.
format Article
author Kai, Liu
Heng, Li
spellingShingle Kai, Liu
Heng, Li
Legal supervision of audit practice in corporate takeovers
author_facet Kai, Liu
Heng, Li
author_sort Kai, Liu
title Legal supervision of audit practice in corporate takeovers
title_short Legal supervision of audit practice in corporate takeovers
title_full Legal supervision of audit practice in corporate takeovers
title_fullStr Legal supervision of audit practice in corporate takeovers
title_full_unstemmed Legal supervision of audit practice in corporate takeovers
title_sort legal supervision of audit practice in corporate takeovers
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2022
url http://journalarticle.ukm.my/19222/1/53700-184377-1-PB.pdf
http://journalarticle.ukm.my/19222/
https://ejournal.ukm.my/juum/issue/view/1516
_version_ 1740826827356635136
score 13.211869

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