Fair Value Opinion Shopping

Abstract

ABSTRACT This study reports the results of an experiment designed to provide empirical evidence related to fair value opinion shopping. The experiment provides initial evidence that managers are likely to shop for fair value opinions from external valuation professionals in the absence of a requirement to disclose that behavior to the board or auditor. Disclosure becomes a meaningful deterrent when the beneficiary of opinion shopping is perceived to be the manager. However, disclosure is an ineffective deterrent when the beneficiary is perceived to be shareholders.