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The Role Of Audit Quality In The Valuation Of Initial Public Offerings

This study provides an empirical examination of the theoretical model proposed by Datar, Feltharn and Hughes (1991) on the demand for audit quality in an initial public offering (PO) environment by utilizing data from Malaysian IPO market. Consistent with the model, two hypotheses are developed; (I...

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Main Author: Hartini, Jaafar
Format: Thesis
Language:English
English
Published: 2002
Subjects:
HG Finance
Online Access:http://etd.uum.edu.my/505/1/HARTINI_BT._JAAFAR.pdf
http://etd.uum.edu.my/505/2/HARTINI_BT._JAAFAR.pdf
http://etd.uum.edu.my/505/
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spelling my.uum.etd.5052013-07-24T12:07:36Z http://etd.uum.edu.my/505/ The Role Of Audit Quality In The Valuation Of Initial Public Offerings Hartini, Jaafar HG Finance This study provides an empirical examination of the theoretical model proposed by Datar, Feltharn and Hughes (1991) on the demand for audit quality in an initial public offering (PO) environment by utilizing data from Malaysian IPO market. Consistent with the model, two hypotheses are developed; (I) there is a positive association between audit quality and firm-specific risk, and (2) financial reports attested to by higher quality auditors should have a greater marginal effect on current market value than the reports associated with low quality auditors. Two models are used to test these predictions. The first one is the author choice model, whch is a multivariate logistic regression model, while the second one is the valuation model developed by Datar et al. (1991). No evidence is found to support the predicted positive relationship between audit quality and firm-specific risk. The results are consistent with the expectation that there is a significant effect of audit quality on the market valuation of PO stocks. This reflects a greater degree of confidence placed by investors on reports approved by high quality auditors. The results are also not sensitive to alternative definitions of variables, omitted variable problems, the presence of outliers or the size effect. Overall, the findngs indicate the role of audit quality as a signaling mechanism in the valuation of PO in Malaysia. 2002 Thesis NonPeerReviewed application/pdf en http://etd.uum.edu.my/505/1/HARTINI_BT._JAAFAR.pdf application/pdf en http://etd.uum.edu.my/505/2/HARTINI_BT._JAAFAR.pdf Hartini, Jaafar (2002) The Role Of Audit Quality In The Valuation Of Initial Public Offerings. Masters thesis, Universiti Utara Malaysia.
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Electronic Theses
url_provider http://etd.uum.edu.my/
language English
English
topic HG Finance
spellingShingle HG Finance
Hartini, Jaafar
The Role Of Audit Quality In The Valuation Of Initial Public Offerings
description This study provides an empirical examination of the theoretical model proposed by Datar, Feltharn and Hughes (1991) on the demand for audit quality in an initial public offering (PO) environment by utilizing data from Malaysian IPO market. Consistent with the model, two hypotheses are developed; (I) there is a positive association between audit quality and firm-specific risk, and (2) financial reports attested to by higher quality auditors should have a greater marginal effect on current market value than the reports associated with low quality auditors. Two models are used to test these predictions. The first one is the author choice model, whch is a multivariate logistic regression model, while the second one is the valuation model developed by Datar et al. (1991). No evidence is found to support the predicted positive relationship between audit quality and firm-specific risk. The results are consistent with the expectation that there is a significant effect of audit quality on the market valuation of PO stocks. This reflects a greater degree of confidence placed by investors on reports approved by high quality auditors. The results are also not sensitive to alternative definitions of variables, omitted variable problems, the presence of outliers or the size effect. Overall, the findngs indicate the role of audit quality as a signaling mechanism in the valuation of PO in Malaysia.
format Thesis
author Hartini, Jaafar
author_facet Hartini, Jaafar
author_sort Hartini, Jaafar
title The Role Of Audit Quality In The Valuation Of Initial Public Offerings
title_short The Role Of Audit Quality In The Valuation Of Initial Public Offerings
title_full The Role Of Audit Quality In The Valuation Of Initial Public Offerings
title_fullStr The Role Of Audit Quality In The Valuation Of Initial Public Offerings
title_full_unstemmed The Role Of Audit Quality In The Valuation Of Initial Public Offerings
title_sort role of audit quality in the valuation of initial public offerings
publishDate 2002
url http://etd.uum.edu.my/505/1/HARTINI_BT._JAAFAR.pdf
http://etd.uum.edu.my/505/2/HARTINI_BT._JAAFAR.pdf
http://etd.uum.edu.my/505/
_version_ 1644276184965447680
score 13.211869

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