Auditor's reputation and equity offerings: The case of arthur andersen

Academic Article

Abstract

  • The certifying and monitoring role of auditors is valuable to clients. By examining the impact of Arthur Andersen's worsening reputation on its clients, we find a 200 basis point more negative reaction to seasoned equity offering (SEO) announcements for firms audited by Andersen. The median firm in our sample loses $31.4 million more than a non-Andersen client. We do not find any unusual underpricing for these SEOs, which suggests that any accounting concerns about the issuers are resolved before the issue dates.
  • Authors

    Published In

    Digital Object Identifier (doi)

    Author List

  • Rauterkus SY; Song K
  • Start Page

  • 121
  • End Page

  • 135
  • Volume

  • 34
  • Issue

  • 4