Advanced Search
MyIDEAS: Login

Auditor choice, retained ownership, and earnings disclosure for IPO firms: Further evidence

Contents:

Author Info

  • Kun Wang
  • Zahid Iqbal
Registered author(s):

    Abstract

    Purpose – The purpose of this research is to provide further evidence on the association between the IPO signaling mechanisms (i.e. retained ownership, auditor choice, and earnings forecast) by using a less restrictive sample and by performing additional empirical tests. Design/methodology/approach – Single equations are used as the baseline approach to estimate the three models. In addition, Copley and Douthett's 2002 simultaneous equation systems are applied to examine whether the results remain the same. Moreover, ranked values of the risk proxies of IPOs are derived and general least squares are run on these ranked variables. Findings – Findings indicate that auditor reputation and retained ownership are not substitute signals. It is observed that as firm risk increases, entrepreneurs are more likely to retain higher ownership to signal firm value. In addition, contended that positive earnings disclosure before IPO is not associated with retained ownership in a significant manner. An analysis of the economic implication of the results suggests that findings are more representative. Research limitations/implications – In this study the risk measures used (as well as those used in other studies) may not adequately proxy for offering firm risk. Additionally, the sample is restricted by missing values of the retained ownership variable. Further study can expand the sample using retained ownership obtained from other data sources. A study employing alternative approaches to control for the supply-side effect of firm risk could be also productive. Practical implications – Findings are of particular interest to firms that are planning to go to the public. They need to evaluate the benefit and cost of selecting a particular information system in signaling firm value to the market. Originality/value – Using a larger sample, comprehensive testing periods, and ranked risk proxies contribute to the literature on evaluating singling mechanisms of IPOs.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=4F3EC58394B176945BD77475D26A755E?contentType=Article&contentId=1562764
    Download Restriction: Cannot be freely downloaded

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal International Journal of Managerial Finance.

    Volume (Year): 2 (2006)
    Issue (Month): 3 (September)
    Pages: 220-240

    as in new window
    Handle: RePEc:eme:ijmfpp:v:2:y:2006:i:3:p:220-240

    Contact details of provider:
    Web page: http://www.emeraldinsight.com

    Order Information:
    Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
    Email:
    Web: http://www.emeraldinsight.com/ijmf.htm

    Related research

    Keywords: Auditors; Financial forecasting; Public finance;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. A.K.M. Waresul Karim & Tony van Zijl & Sabur Mollah, 2013. "Impact of board ownership, CEO-Chair duality and foreign equity participation on auditor quality choice of IPO companies: Evidence from an emerging market," International Journal of Accounting and Information Management, Emerald Group Publishing, vol. 21(2), pages 148-169, March.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eme:ijmfpp:v:2:y:2006:i:3:p:220-240. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.