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The importance of audit committees in initial public offerings

Dimovski, William and Kelly, Christopher 2004, The importance of audit committees in initial public offerings, ICFAI journal of audit practice, vol. 1, no. 4, pp. 7-11.

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Title The importance of audit committees in initial public offerings
Author(s) Dimovski, William
Kelly, Christopher
Journal name ICFAI journal of audit practice
Volume number 1
Issue number 4
Start page 7
End page 11
Publisher ICFAI University Press
Place of publication Hyderabad, India
Publication date 2004-10
ISSN 0972-9070
Summary This paper follows Balvers, McDonald and Miller (1988), and Beatty (1989), who find lower underpricing in Initial Public Offerings (IPOs) when prestigious auditors are used to attest to the IPO's financial statements. Australian IPOs are not obliged to nominate audit firms in the prospectus, but often identify that they will have audit committees so as to assist in more appropriate corporate governance. This paper analyzes if IPOs identifying the existence of audit committees in the prospectus have a lower underpricing return. While our findings are consistent with previous studies concluding that both the size of the new issue and the use of an underwriter are important ingredients in the level of underpricing return, the inclusion of an audit committee in the prospectuses has actually increased underpricing returns. The capital market may view the audit committee identification with some skepticism.
Notes
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Language eng
Field of Research 150201 Finance
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2004, ICFAI University Press
Persistent URL http://hdl.handle.net/10536/DRO/DU:30002388

Document type: Journal Article
Collections: School of Accounting, Economics and Finance
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