The association between audit quality, accounting disclosures and firm-specific risk: Evidence from initial public offerings

Lee, P; Stokes, D; Taylor, S; Walter, T

The association between audit quality, accounting disclosures and firm-specific risk: Evidence from initial public offerings

Lee, P Stokes, D Taylor, S

Walter, T

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Publication Type:: Journal Article
Citation:: Journal of Accounting and Public Policy, 2003, 22 (5), pp. 377 - 400
Issue Date:: 2003-09-01

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Field	Value	Language
dc.contributor.author	Lee, P	en_US
dc.contributor.author	Stokes, D	en_US
dc.contributor.author	Taylor, S https://orcid.org/0000-0001-8870-4966	en_US
dc.contributor.author	Walter, T	en_US
dc.date.issued	2003-09-01	en_US
dc.identifier.citation	Journal of Accounting and Public Policy, 2003, 22 (5), pp. 377 - 400	en_US
dc.identifier.issn	0278-4254	en_US
dc.identifier.uri	http://hdl.handle.net/10453/5281
dc.description.abstract	In an environment where expected litigation costs were relatively low and the provision of forward-looking accounting information was voluntary (Australia), we show that IPO firms voluntarily providing an earnings forecast within the offer document are significantly more likely to use a high quality auditor, consistent with the signaling role of auditor attestation being at least partially dependent on the extent of voluntary, audited disclosures. Any trade-off between auditor choice with either firm risk or retained ownership is confined to smaller IPOs and/or those using less prestigious underwriters, which are also those where support for the signaling role of auditors (and voluntary disclosure) is evident using a valuation model. Our results highlight the failure of "stylised" signaling models such as [Datar et al. (1991); Hughes (1986)] to recognize extensive interaction between various mechanisms, resulting in multiple signaling equilibria. © 2003 Elsevier Inc. All rights reserved.	en_US
dc.relation	http://purl.org/au-research/grants/arc/C10010019
dc.relation	http://purl.org/au-research/grants/arc/A79803591
dc.relation.ispartof	Journal of Accounting and Public Policy	en_US
dc.relation.isbasedon	10.1016/j.jaccpubpol.2003.08.003	en_US
dc.subject.classification	Accounting	en_US
dc.title	The association between audit quality, accounting disclosures and firm-specific risk: Evidence from initial public offerings	en_US
dc.type	Journal Article
utslib.citation.volume	5	en_US
utslib.citation.volume	22	en_US
utslib.for	150102 Auditing and Accountability	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
dc.location.activity	Singapore
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	5	en_US
pubs.publication-status	Published	en_US
pubs.volume	22	en_US

Abstract:

In an environment where expected litigation costs were relatively low and the provision of forward-looking accounting information was voluntary (Australia), we show that IPO firms voluntarily providing an earnings forecast within the offer document are significantly more likely to use a high quality auditor, consistent with the signaling role of auditor attestation being at least partially dependent on the extent of voluntary, audited disclosures. Any trade-off between auditor choice with either firm risk or retained ownership is confined to smaller IPOs and/or those using less prestigious underwriters, which are also those where support for the signaling role of auditors (and voluntary disclosure) is evident using a valuation model. Our results highlight the failure of "stylised" signaling models such as [Datar et al. (1991); Hughes (1986)] to recognize extensive interaction between various mechanisms, resulting in multiple signaling equilibria. © 2003 Elsevier Inc. All rights reserved.

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http://hdl.handle.net/10453/5281