Audit Quality and Seasoned Equity Offerings Methods  

Dang, M., Puwanenthiren, P., Truong, C., Henry, D. and Vo, X.V. 2022. Audit Quality and Seasoned Equity Offerings Methods  . International Review of Financial Analysis. 83 102227. https://doi.org/10.1016/j.irfa.2022.102227

TitleAudit Quality and Seasoned Equity Offerings Methods  
TypeJournal article
AuthorsDang, M., Puwanenthiren, P., Truong, C., Henry, D. and Vo, X.V.
Abstract

Using a sample of U.S. seasoned equity offering (SEO) during the period 2002-2017, we document that audit quality is associated with SEO issuance method choice. Specifically, firms with higher quality auditors are more likely to adopt the accelerated offerings issue method instead of using other seasoned equity offering methods. We also identify that audit tenure and industry audit specialization influence the relation between audit quality and the likelihood of undertaking accelerated SEO offerings, and that the relationship is more pronounced in the presence of weaker firm-level information and governance environments. Extending from the conclusion that accelerated offerings serve as a quality certification mechanism, we also find that firms completing accelerated offerings enjoy lower audit fees in subsequent years. These firms also exhibit superior post-SEO-issue long-term abnormal stock performance. Overall, our study shows that the certifying and monitoring role of auditors is valuable to clients, underwriters, and investors in SEO transactions.

KeywordsSeasoned equity offerings
audit quality
audit pricing
Propensity score matching
Article number102227
JournalInternational Review of Financial Analysis
Journal citation83
ISSN1057-5219
Year2022
PublisherElsevier
Accepted author manuscript
License
CC BY-NC-ND 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.irfa.2022.102227
Publication dates
Published online05 Jun 2022
Published in printOct 2022

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