Do Issuers Pay for High Quality Audit Services?——Evidence from IPO-audit experience
Using A-share IPOs during 2006 to 2023,we investigate the relation between auditor's project experience and IPO audit pricing.We find that IPO audit experience is positively associated with IPO audit fees.Issuers with an experienced auditor exhibit higher IPO success rates,lower IPO underpricing,and better post-IPO performance.Heterogeneity analysis shows that both successful and failed IPO experiences are positively associated with IPO audit fees.Compared to the second signing auditor,the first signing auditor's experience has a more significant effect on IPO audit fees.Additionally,the positive relations are more pronounced in audit firms with larger market share,during the period of low approval rate and after the register-based IPO reform.Our findings provide broad insights on IPO audit pricing from the audit team and personal perspective,and have policy implications for IPO regulation reform in China.
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