Title

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

Document Type

Journal article

Source Publication

Review of Quantitative Finance and Accounting

Publication Date

1-1-1995

Volume

5

Issue

3

First Page

241

Last Page

251

Keywords

auditor quality, new issues, risk, valuation

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.

DOI

10.1007/BF01074840

Print ISSN

0924865X

E-ISSN

15737179

Publisher Statement

Copyright © 1995 Kluwer Academic Publishers, Boston

Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Firth, M., & Smith, A. (1995). Auditor quality, corporate risk, and the valuation of new issues. Review of Quantitative Finance and Accounting, 5(3), 241-251. doi: 10.1007/BF01074840