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
Publisher
Springer New York LLC
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
Language
English
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