Auditing's Involvement in Initial Public Offering Success

Posted: 28 Feb 2004

See all articles by Gary K. Taylor

Gary K. Taylor

University of Alabama - Culverhouse College of Commerce & Business Administration

David D. Williams

Ohio State University (OSU) - Department of Accounting & Management Information Systems

Date Written: February 23, 2004

Abstract

We examine two audit attributes that may contribute to a successful initial public offering (IPO). We define success as an IPO firm that reaches the capital markets. We find that the existence of a high quality (Big 5) auditor and the absence of a going concern audit report are positively associated with the completion of the IPO process, particularly for medium and small firms. Our results are robust after controlling for the endogeneity between auditor selection and the presence of high quality underwriters and venture capitalist. Consistent results were also noted when examining only firms with a high probability of receiving a going concern opinion and those successful IPOs that were difficult-to-place in the market. Finally, withdrawn firms were found to shed their Non-Big 5 auditors and going concern audit reports prior to re-emerging in the capital markets.

Keywords: Audit quality,audit opinions, initial public offerings

JEL Classification: M41, M49, G24

Suggested Citation

Taylor, Gary Kenneth and Williams, David D., Auditing's Involvement in Initial Public Offering Success (February 23, 2004). Available at SSRN: https://ssrn.com/abstract=507763

Gary Kenneth Taylor

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Box 870223
Dept. of Accounting
Tuscaloosa, AL 35487-0223
United States

David D. Williams (Contact Author)

Ohio State University (OSU) - Department of Accounting & Management Information Systems ( email )

2100 Neil Avenue
Columbus, OH 43210
United States
614-292-8566 (Phone)

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