The effect of industry-specialist auditors on SEO underpricing before and after the global financial crisis

Soo Young Kwon, Jongwon Park, Jaeyoon Yu

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)89-113
Number of pages25
JournalAuditing
Volume37
Issue number1
DOIs
Publication statusPublished - 1 Feb 2018

Keywords

  • Global financial crisis
  • Industry-specialist auditors
  • SEO underpricing

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