Empirical analysis of the economic demand for auditing in the initial public offerings market

Article Abstract:

Auditing demand in the initial public offerings (IPO) market was examined with particular focus on IPO auditor choice, auditor compensation for IPOs and the relation between auditors and IPO underpricing. The IPO market was deemed an appropriate setting for investigating the importance of the auditing function because the proliferation of informational asymmetries requires information that could be used to determine equity values as well as market signaling to moderate the adverse effects of poor selection. Smaller IPOs launched in 1993 and 1994 were examined to determine the informational signaling and insurance signaling roles for the independent audit. The findings indicate the significance of an insurance-based demand for IPO audits, and that the size of a deal helps explain the link between auditor choice and underpricing and influences auditor compensation for new and established firms alike.

Financial Personnel, Supply and demand, Accounting and auditing, Going public (Securities), Initial public offerings, Auditors, Financial occupations

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An empirical examination of conference calls as a voluntary disclosure medium

Article Abstract:

A sample of corporate conference calls was examined to determine whether these calls provide information to stock market players, whether such information is equally accessible to investors, and why not all managers hold conference calls. An analysis of 1,056 conference calls made by 808 companies during Feb-Nov 1995 indicates that conference calls provide information to investors that cannot be found in the corresponding press release, and major market participants use trade on such information in real time. The results also reveal that the companies that hold conference calls are usually those that are large, highly profitable and heavily followed by analysts. They also tend to be in the high-technology sector, experience rapid growth and have higher market-to-book ratios than other companies.

Investor relations, Business communication, Teleconferencing

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The impact of earnings announcements on the permanent price effects of block trades

Article Abstract:

The permanent price effects that are observed in block trades are investigated in terms of how they are affected by earnings announcements. These price effects are examined before and after earnings announcements to test the hypothesis that expected public disclosures facilitate the acquisition of private information. The study seeks to determine whether there is greater price adjustments before earnings announcements or after earnings announcements. It also investigates the impact of earnings disclosure on the temporary price effects of block trades. Findings indicate that the acquisition of private information may be more valuable in pre-earnings announcement periods when earnings have greater potential to be informative.

Prices and rates, Stocks, Stock prices

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