What question did this study set out to answer?

The research aims to examine how auditor credibility influences initial public offerings and the dynamics between entrepreneurs and investment bankers.

March 18, 2026The Accounting Review

Auditor Credibility and Initial Public Offerings.

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Authors

KMKrishnagopal MenonBoston University DWDavid D. WilliamsThe Ohio State University

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Implication

This analysis investigates the role of auditor credibility in IPOs, affecting investment banker fees and auditor selection.

Key Points

The research aims to examine how auditor credibility influences initial public offerings and the dynamics between entrepreneurs and investment bankers.
Analyzed companies that went public in 1985 and 1986
Investigated auditor changes prior to the IPO
Conducted logistic regression analysis on auditor selection
Performed regression analysis on investment banker compensation in relation to auditor type
Few auditor changes were observed prior to the offering
Companies changing auditors showed a clear preference for more credible CPAs
Logistic regression indicated firms with prestigious bankers preferred credible auditors over local ones
Investment banking fees were lower for clients with Big Eight auditors in 'firm commitment' offerings
No significant auditor effect was found in 'best efforts' offerings

Cite This Study

Menon et al. (1991) studied this question.

synapsesocial.com/papers/69ba424e4e9516ffd37a26c3 https://doi.org/10.2308/tar-9605070383

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Auditor Credibility and Initial Public Offerings.

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Implication

Key Points

Cite This Study

Auditor Credibility and Initial Public Offerings.

Discussion

Member takes

Implication

Key Points

Cite This Study

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