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

Michael Arthur FIRTH; Andrew SMITH

doi:10.1007/BF01074840

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

Michael Arthur FIRTH, Andrew SMITH

Lingnan College

Research output: Journal Publications › Journal Article (refereed) › peer-review

8 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 language	English
Pages (from-to)	241-251
Number of pages	11
Journal	Review of Quantitative Finance and Accounting
Volume	5
Issue number	3
DOIs	https://doi.org/10.1007/BF01074840
Publication status	Published - 1 Jan 1995

Keywords

auditor quality
new issues
risk
valuation

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10.1007/BF01074840

Cite this

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

Abstract

Keywords

Access to Document

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