The effect of industry-specialist auditors on SEO underpricing before and after the global financial crisis
This study examines whether auditors’ industry expertise is negatively associated with underpricing of seasoned equity offerings (SEO) and whether the association between auditors’ industry expertise and SEO underpricing changes around the global financial crisis (GFC). Using a sample of 2,028 SEO observations from 2001 to 2013, we document that in the pre-GFC period, auditors’ industry expertise is negatively associated with SEO underpricing, but not during the post-GFC period. Industry-specialist auditors are also associated with higher earnings response coefficients in the pre-GFC period, but not in the post-GFC period. These results suggest that the GFC affected investor confidence in industry-specialist auditors in the capital markets.
|Keywords||Global financial crisis, Industry-specialist auditors, SEO underpricing|
|JEL||Financial Crises (jel G01), Information and Market Efficiency; Event Studies (jel G14), Auditing (jel M42)|
|Persistent URL||dx.doi.org/10.2308/ajpt-51779, hdl.handle.net/1765/104592|
|Series||ERIM Top-Core Articles|
|Journal||Auditing: a journal of practice and theory|
Kwon, S.Y, Park, J, & Yu, J. (2018). The effect of industry-specialist auditors on SEO underpricing before and after the global financial crisis. Auditing: a journal of practice and theory, 37(1), 89–113. doi:10.2308/ajpt-51779