Auditor’s Reputation and Equity Offerings: The Case of Arthur Andersen
AbstractThe certifying and monitoring role of auditors is valuable to clients. By examining the impact of Arthur Andersen’s worsening reputation on its clients, we find a 200 basis point more negative reaction to seasoned equity offering (SEO) announcements for firms audited by Andersen. The median firm in our sample loses $31.4 million more than a non-Andersen client. We do not find any unusual underpricing for these SEOs, which suggests that any accounting concerns about the issuers are resolved before the issue dates.
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Bibliographic InfoArticle provided by Financial Management Association in its journal Financial Management.
Volume (Year): 34 (2005)
Issue (Month): 4 (Winter)
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Postal: University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620
Web page: http://www.fma.org/
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