Earnings Quality of Foreign versus U.S. Reverse Mergers: Geographical Location or Firm-Level Incentives?

ABSTRACT

We test whether geographical location, audit quality, and equity offering play a role in the earnings quality of reverse merger (RM) firms. We provide evidence that, contrary to the popular focus on foreign reverse mergers by the business press, earnings management is equally likely in both U.S. and foreign RM companies. We find that firm ...more