Are Assurance Services Provided by Auditors on Initial Public Offerings Influenced by Market Conditions?

34 Pages Posted: 6 Feb 2009 Last revised: 17 Jul 2014

See all articles by Paul A. Copley

Paul A. Copley

James Madison University - School of Accounting

Edward B. Douthett

George Mason University - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: April 28, 2008

Abstract

The initial public offering (IPO) market is characterized by large, periodic swings in new issue volume, commonly referred to as hot and cold markets. We compare IPO assurance fees over these cycles controlling for factors that are potentially associated with hot IPO markets. We find that average assurance fees are lower during hot market periods and that fee coefficients associated with certain client- and IPO-specific attributes are lower during hot markets. Our results are consistent with the explanation that IPO assurance services are influenced by varying client demands to defer or accelerate the date of the new issue in order to capitalize on market conditions.

Keywords: Audit demand, initial public offering, audit fees, hot markets

JEL Classification: M40, M42, G12, G24

Suggested Citation

Copley, Paul A. and Douthett, Edward B., Are Assurance Services Provided by Auditors on Initial Public Offerings Influenced by Market Conditions? (April 28, 2008). Contemporary Accounting Research, Vol. 26, No. 2, 2009. Available at SSRN: https://ssrn.com/abstract=1338874 or http://dx.doi.org/10.2139/ssrn.1338874

Paul A. Copley

James Madison University - School of Accounting ( email )

MSC 0203
335 Showker Hall
Harrisonburg, VA 22807
United States
540-568-3081 (Phone)

Edward B. Douthett (Contact Author)

George Mason University - School of Business ( email )

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