Information risk and underwriter switching in SEOs: Evidence from China

In this paper we examine whether information risk affects underwriter switching in a seasoned equity offering (SEO) process. Building on previous research, we hypothesize that SEO firms and underwriters associate with one another by mutual choice, and firms with a low degree of information risk tend...

Full description

Saved in:
Bibliographic Details
Main Authors: LUO, Wei, RAO, Pingui, YUE, Heng
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2010
Subjects:
Online Access:https://ink.library.smu.edu.sg/soa_research/1582
https://ink.library.smu.edu.sg/context/soa_research/article/2609/viewcontent/Luo_et_al_2010_Journal_of_Business_Finance___Accounting__1_.pdf
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Singapore Management University
Language: English
id sg-smu-ink.soa_research-2609
record_format dspace
spelling sg-smu-ink.soa_research-26092017-08-10T08:40:31Z Information risk and underwriter switching in SEOs: Evidence from China LUO, Wei RAO, Pingui YUE, Heng In this paper we examine whether information risk affects underwriter switching in a seasoned equity offering (SEO) process. Building on previous research, we hypothesize that SEO firms and underwriters associate with one another by mutual choice, and firms with a low degree of information risk tend to match up with prestigious underwriters. Using a sample of SEO firms in China and employing accruals quality as a proxy of information risk, we find evidence consistent with our hypothesis: the information risk and the initial public offering (IPO) underwriters’ reputation at the time of the SEO jointly determine the probability that the firms will switch their underwriters. A mismatch between information risk and underwriter reputation increases the probability of an underwriter switching. Furthermore, if the firms decide to switch underwriters, then a lower degree of information risk is associated with a greater likelihood of changing to a more reputable underwriter. We also find that the relationship between information risk and the choice of underwriter reputation primarily exists in non-state-controlled companies. 2010-06-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1582 info:doi/10.1111/j.1468-5957.2010.02211.x https://ink.library.smu.edu.sg/context/soa_research/article/2609/viewcontent/Luo_et_al_2010_Journal_of_Business_Finance___Accounting__1_.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University information risk underwriter reputation underwriter switching state ownership seasoned equity offerings Information Security Management Information Systems
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic information risk
underwriter reputation
underwriter switching
state ownership
seasoned equity offerings
Information Security
Management Information Systems
spellingShingle information risk
underwriter reputation
underwriter switching
state ownership
seasoned equity offerings
Information Security
Management Information Systems
LUO, Wei
RAO, Pingui
YUE, Heng
Information risk and underwriter switching in SEOs: Evidence from China
description In this paper we examine whether information risk affects underwriter switching in a seasoned equity offering (SEO) process. Building on previous research, we hypothesize that SEO firms and underwriters associate with one another by mutual choice, and firms with a low degree of information risk tend to match up with prestigious underwriters. Using a sample of SEO firms in China and employing accruals quality as a proxy of information risk, we find evidence consistent with our hypothesis: the information risk and the initial public offering (IPO) underwriters’ reputation at the time of the SEO jointly determine the probability that the firms will switch their underwriters. A mismatch between information risk and underwriter reputation increases the probability of an underwriter switching. Furthermore, if the firms decide to switch underwriters, then a lower degree of information risk is associated with a greater likelihood of changing to a more reputable underwriter. We also find that the relationship between information risk and the choice of underwriter reputation primarily exists in non-state-controlled companies.
format text
author LUO, Wei
RAO, Pingui
YUE, Heng
author_facet LUO, Wei
RAO, Pingui
YUE, Heng
author_sort LUO, Wei
title Information risk and underwriter switching in SEOs: Evidence from China
title_short Information risk and underwriter switching in SEOs: Evidence from China
title_full Information risk and underwriter switching in SEOs: Evidence from China
title_fullStr Information risk and underwriter switching in SEOs: Evidence from China
title_full_unstemmed Information risk and underwriter switching in SEOs: Evidence from China
title_sort information risk and underwriter switching in seos: evidence from china
publisher Institutional Knowledge at Singapore Management University
publishDate 2010
url https://ink.library.smu.edu.sg/soa_research/1582
https://ink.library.smu.edu.sg/context/soa_research/article/2609/viewcontent/Luo_et_al_2010_Journal_of_Business_Finance___Accounting__1_.pdf
_version_ 1770573480579825664