Purpose This study aims to revisit the information advantage of local signing auditors from the perspectives of geographic proximity and place attachment. Design/methodology/approach Using all firms that went public under the Chinese registration system from July 2019 to October 2022, the authors conduct multiple regression analysis to test how signing auditors’ geographic proximity and place attachment are jointly associated with client firms’ IPO underpricing. Findings Local signing auditors are associated with lower IPO underpricing than non-local auditors, consistent with the view that geographic proximity provides an information advantage that helps mitigate the information asymmetry faced by IPO firms. However, this association is weaker when signing auditors are more place-attached. Specifically, only local signing auditors with low levels of place attachment are associated with lower information asymmetry and IPO underpricing. Originality/value By examining the interplay between geographic proximity and place attachment, this study provides new insights into the role of local signing auditors in capital market pricing efficiency. The findings also offer a deeper understanding of place attachment in the financial field.
Jia et al. (Wed,) studied this question.