Going-concern initial public offerings

We study the relation between audit reports and the capital-raising activities of small business by studying the role of going-concern (GC) audit opinions in IPOs. After controlling for other effects, we find that the presence of a GC opinion is positively related to whether a stock delists (for del...

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Bibliographic Details
Published inJournal of accounting & economics Vol. 30; no. 3; pp. 279 - 313
Main Authors Willenborg, Michael, McKeown, James C.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.12.2000
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Accounting and Economics
Subjects
Accounting
Auditing
Auditors opinions
Business
Capital
Correlation analysis
Delisting
Financial reporting
Going concerns
Going-concern opinions
Initial public offerings
Public enterprises
Small and medium sized enterprises
Stock market delistings
Studies
Underpricing
United States > US
Going-concern opinions
Underpricing
M49
G32
Initial public offerings
G12
Delisting
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Summary:We study the relation between audit reports and the capital-raising activities of small business by studying the role of going-concern (GC) audit opinions in IPOs. After controlling for other effects, we find that the presence of a GC opinion is positively related to whether a stock delists (for deleterious reasons) within two years of IPO. We also find that GC IPOs suffer less first-day underpricing. Based on Rock (1986), this implies that firms with GCs have less ex ante uncertainty in the sense that the information conveyed by a GC helps uninformed investors estimate the dispersion of secondary market values.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0165-4101
1879-1980
DOI:10.1016/S0165-4101(01)00014-3