Impact of Shared Auditors on IPO Audit Quality and Underpricing: Evidence from Group Affiliates and Signing Partners
研究集团关联的IPO公司与已上市关联公司共享审计师如何影响IPO审计质量和抑价，发现共享审计师降低审计质量、提高抑价，但顶级审计事务所或行业专家可缓解此效应。
SYNOPSIS We examine how auditor-sharing between group-affiliated IPO firms and their listed affiliates affects IPO audit quality and underpricing. Using Chinese IPOs from 2001 to 2021, we find that common auditors lead to lower IPO audit quality and higher underpricing, especially when signing audit partners are also shared. Further, listed affiliates’ annual audit quality declines after their auditor undertakes IPO audits for other group firms. However, when the shared auditor is a top ten firm, the signing partner is an industry specialist, or a top-tier underwriter is involved, shared auditors enhance audit quality and reduce underpricing, indicating that knowledge spillover can outweigh agency costs. Additionally, IPO firms sharing auditors with group affiliates perform worse in the long term. Overall, auditors’ economic dependence on group clients compromises auditor independence, raising concerns about shared arrangements and suggesting the need, in some instances, for stricter oversight of auditors serving interconnected clients. JEL Classifications: M42; G32; M41.