Audit Quality, IPO First-Day Price Limit and IPO Underpricing
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DOI: 10.23977/iemb.2019.082
Corresponding Author
Kaini Chen
ABSTRACT
This paper collects non-financial IPOs in the A-share market of Shanghai Stock Exchange and Shenzhen Stock Exchange from July 2009 to July 2015 as a sample and uses two multiple regression models to analyze the correlations between pre-market audit quality, IPO first-day price limit and IPO underpricing. Firstly, this paper analyzes the correlation between the pre-market audit quality and the IPO underpricing. Secondly, the interaction effect leaded by IPO first-day price limit is analyzed to find out whether it will impact the effectiveness within pre-market audit quality and IPO underpricing. At last, we found that in Chinese IPO markets, pre-market audit does the signaling job and its effect is significantly influenced by the first-day price limit. When IPO first-day price is limited, the effect of pre-market audit quality on IPO underpricing is more significant.
KEYWORDS
IPO, Audit Quality, Stock Exchange