TY - JOUR
T1 - The impact of audit quality in rights offerings
AU - Balachandran, Balasingham
AU - Faff, Robert
AU - Nguyen, Lily H.G.
AU - Puwanenthiren, Premkanth
N1 - Publisher Copyright:
© 2018 Accounting and Finance Association of Australia and New Zealand
PY - 2020/9/1
Y1 - 2020/9/1
N2 - Using audit quality as our core focus, we take a fresh look at the tradability and standby status in rights offerings, and the market reaction during the subscription period in the US market. We find that firms with high audit quality are more likely to choose tradable or full standby rights issues. We also find that the subscription period price reaction is positively related to audit quality and negatively related to issue price discount. These results demonstrate an important role played by the choice of auditors in the design of rights offerings, particularly in mitigating the negative price reaction during the subscription period.
AB - Using audit quality as our core focus, we take a fresh look at the tradability and standby status in rights offerings, and the market reaction during the subscription period in the US market. We find that firms with high audit quality are more likely to choose tradable or full standby rights issues. We also find that the subscription period price reaction is positively related to audit quality and negatively related to issue price discount. These results demonstrate an important role played by the choice of auditors in the design of rights offerings, particularly in mitigating the negative price reaction during the subscription period.
UR - http://www.scopus.com/inward/record.url?scp=85059289528&partnerID=8YFLogxK
U2 - 10.1111/acfi.12429
DO - 10.1111/acfi.12429
M3 - Article
AN - SCOPUS:85059289528
SN - 0810-5391
VL - 60
SP - 2007
EP - 2037
JO - Accounting and Finance
JF - Accounting and Finance
IS - 3
ER -