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:	eng eng
Published:	2002
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/505/1/HARTINI_BT._JAAFAR.pdf https://etd.uum.edu.my/505/2/HARTINI_BT._JAAFAR.pdf
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id	my-uum-etd.505
record_format	uketd_dc
spelling	my-uum-etd.5052013-07-24T12:07:36Z The Role Of Audit Quality In The Valuation Of Initial Public Offerings 2002 Hartini, Jaafar Sekolah Siswazah Sekolah Siswazah 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 https://etd.uum.edu.my/505/ https://etd.uum.edu.my/505/1/HARTINI_BT._JAAFAR.pdf application/pdf eng validuser https://etd.uum.edu.my/505/2/HARTINI_BT._JAAFAR.pdf application/pdf eng public masters masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
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
qualification_name	masters
qualification_level	Master's degree
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
granting_institution	Universiti Utara Malaysia
granting_department	Sekolah Siswazah
publishDate	2002
url	https://etd.uum.edu.my/505/1/HARTINI_BT._JAAFAR.pdf https://etd.uum.edu.my/505/2/HARTINI_BT._JAAFAR.pdf
_version_	1747826931349323776

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

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