Auditor quality, corporate risk, and the valuation of new issues

Michael Arthur FIRTH, Andrew SMITH

    Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

    6 Citations (Scopus)

    Abstract

    This paper tests two hypotheses derived from the Data et al. (1991) theoretical model of auditor choice by companies newly listing on the stock exchange. The results offer support to their predictions of the demand for auditor quality. In particular, higher-risk companies are associated with the selection of a high-quality auditor, as proxied by a Big Eight firm of accountants. Additionally, companies who employed Big Eight firms had higher market valuations of their stock at the time of listing.
    Original languageEnglish
    Pages (from-to)241-251
    Number of pages11
    JournalReview of Quantitative Finance and Accounting
    Volume5
    Issue number3
    DOIs
    Publication statusPublished - 1 Jan 1995

    Fingerprint

    New issues
    Auditor quality
    Accountants
    Prediction
    Auditor choice
    Stock exchange
    Market valuation

    Keywords

    • auditor quality
    • new issues
    • risk
    • valuation

    Cite this

    FIRTH, Michael Arthur ; SMITH, Andrew. / Auditor quality, corporate risk, and the valuation of new issues. In: Review of Quantitative Finance and Accounting. 1995 ; Vol. 5, No. 3. pp. 241-251.
    @article{2f37721f5d634e0c8d9fe794a8768eb2,
    title = "Auditor quality, corporate risk, and the valuation of new issues",
    abstract = "This paper tests two hypotheses derived from the Data et al. (1991) theoretical model of auditor choice by companies newly listing on the stock exchange. The results offer support to their predictions of the demand for auditor quality. In particular, higher-risk companies are associated with the selection of a high-quality auditor, as proxied by a Big Eight firm of accountants. Additionally, companies who employed Big Eight firms had higher market valuations of their stock at the time of listing.",
    keywords = "auditor quality, new issues, risk, valuation",
    author = "FIRTH, {Michael Arthur} and Andrew SMITH",
    year = "1995",
    month = "1",
    day = "1",
    doi = "10.1007/BF01074840",
    language = "English",
    volume = "5",
    pages = "241--251",
    journal = "Review of Quantitative Finance and Accounting",
    issn = "0924-865X",
    publisher = "Springer New York",
    number = "3",

    }

    Auditor quality, corporate risk, and the valuation of new issues. / FIRTH, Michael Arthur; SMITH, Andrew.

    In: Review of Quantitative Finance and Accounting, Vol. 5, No. 3, 01.01.1995, p. 241-251.

    Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

    TY - JOUR

    T1 - Auditor quality, corporate risk, and the valuation of new issues

    AU - FIRTH, Michael Arthur

    AU - SMITH, Andrew

    PY - 1995/1/1

    Y1 - 1995/1/1

    N2 - This paper tests two hypotheses derived from the Data et al. (1991) theoretical model of auditor choice by companies newly listing on the stock exchange. The results offer support to their predictions of the demand for auditor quality. In particular, higher-risk companies are associated with the selection of a high-quality auditor, as proxied by a Big Eight firm of accountants. Additionally, companies who employed Big Eight firms had higher market valuations of their stock at the time of listing.

    AB - This paper tests two hypotheses derived from the Data et al. (1991) theoretical model of auditor choice by companies newly listing on the stock exchange. The results offer support to their predictions of the demand for auditor quality. In particular, higher-risk companies are associated with the selection of a high-quality auditor, as proxied by a Big Eight firm of accountants. Additionally, companies who employed Big Eight firms had higher market valuations of their stock at the time of listing.

    KW - auditor quality

    KW - new issues

    KW - risk

    KW - valuation

    UR - http://commons.ln.edu.hk/sw_master/1968

    U2 - 10.1007/BF01074840

    DO - 10.1007/BF01074840

    M3 - Journal Article (refereed)

    VL - 5

    SP - 241

    EP - 251

    JO - Review of Quantitative Finance and Accounting

    JF - Review of Quantitative Finance and Accounting

    SN - 0924-865X

    IS - 3

    ER -