The effect of Earnings Quality and Audit Quality on avoid of Initial Public Offerings (IPOs) Underpricing
Quarterly Journal of Securities Exchange

Quarterly Journal of Securities Exchange

The effect of Earnings Quality and Audit Quality on avoid of Initial Public Offerings (IPOs) Underpricing

Document Type : Original Article

Authors
1 Distinguished Professor, Accounting Department, Faculty of Economics, Management and Social Sciences, Shiraz University, Shiraz, Iran.
2 Ph.D. Candidate of Accounting, Faculty of Social Sciences, Economics and Management Shiraz University, Shiraz, Iran
3 Ph.D. Candidate of Accounting, Faculty of Social Sciences, Economics and Management Shiraz University, Shiraz, Iran.
Abstract
The aim of this study is to investigate the effect of Earnings quality and audit quality on avoid of Initial Public Offerings (IPOs) Underpricing of stocks. The study period is from 2001 to 2020 and the statistical sample consists of 253 companies listed on the Tehran Stock Exchange (TSE) and Fara Bourse. For this purpose, first, according to the first study model, the relationship between earnings quality and IPOs Underpricing was examined and earnings quality was measured through two components: earnings sustainability and accruals quality. Then, in the second model, the relationship between audit quality and IPOs Underpricing was adjusted. The audit quality in the present study includes the size of the audit firm, the tenure and the type of auditor's opinions. The results showed that on average, 28% of the initial public offering underpricing of stocks occurs in the Iranian capital market. In addition, the earnings sustainability and the accruals quality are negatively and significantly related to IPOs Underpricing. Also, the size of the auditing firm and the type of auditor's opinions have a negative and significant relationship with IPOs Underpricing of shares, but the tenure of the auditor Intermediate insignificance has nothing to do with IPOs Underpricing of shares.
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