Underwriter–Auditor Relationship and Pre-IPO Earnings Management: Evidence from China
This study examines the influence of underwriter–auditor relationship (UAR) on pre-initial public offering (IPO) earnings management. Using a sample of Chinese to-be-listed firms, we find that a close UAR, as reflected in repeated collaborations between an underwriter and an audit firm in IPOs, is p...
| VerfasserInnen: | ; ; ; |
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| Medienart: | Elektronisch Aufsatz |
| Sprache: | Englisch |
| Verfügbarkeit prüfen: | HBZ Gateway |
| Journals Online & Print: | Lade...
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| Fernleihe: | Fernleihe für die Fachinformationsdienste |
| Veröffentlicht: |
2018
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| In: |
Journal of business ethics
Jahr: 2018, Band: 152, Heft: 2, Seiten: 365-392 |
| weitere Schlagwörter: | B
Political connections
B The collusion incentive B Underwriter–auditor relationship (UAR) B Underwriter (auditor) reputation B Earnings management B Legal Environment |
| Online-Zugang: |
Volltext (lizenzpflichtig) |
| Zusammenfassung: | This study examines the influence of underwriter–auditor relationship (UAR) on pre-initial public offering (IPO) earnings management. Using a sample of Chinese to-be-listed firms, we find that a close UAR, as reflected in repeated collaborations between an underwriter and an audit firm in IPOs, is positively associated with pre-IPO earnings management. This association is more pronounced for firms with politically connected auditors/underwriters, firms with less reputable auditors/underwriters, firms located in provinces with weak legal environment, firms to-be-listed on boards with lax listing requirements, and firms whose auditors are with low industry specialization, and legal liability exposures. We provide further evidence that UAR is associated with greater likelihood of irregular activities in post-IPO period and poorer post-IPO financial performance. To the extent that we control for alternative explanations and potential endogeneity, our results suggest that the collusion incentive is likely to drive repeated collaborations between underwriters and auditors in the Chinese IPO market. Our findings provide interesting implications for auditors, investors, and regulators seeking to understand the Chinese IPO market. |
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| ISSN: | 1573-0697 |
| Enthält: | Enthalten in: Journal of business ethics
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| Persistent identifiers: | DOI: 10.1007/s10551-016-3278-4 |
