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The Pricing Of Assurance Services In Secondary Equity Offerings, Neil L. Fargher, Brian W. Mayhew, Michael S. Wilkins
The Pricing Of Assurance Services In Secondary Equity Offerings, Neil L. Fargher, Brian W. Mayhew, Michael S. Wilkins
School of Business Faculty Research
This paper examines the pricing of assurance services in secondary equity offerings (SEOs). Our empirical model extends initial public offering (IPO) fee specifications to include variables that are unique to, or more relevant for, secondary offerings. We document an inverse relationship between SEO fees and a client's ability to delay its secondary offering, suggesting that auditors do not charge as much for SEOs made by relatively mature firms. The relationship reverses, however, when the client is required to use more comprehensive types of filings (i.e., when assurance effort is higher). We also show that fees are higher when the SEO …
The Impact On Ipo Assurance Fees Of Commercial Bank Entry Into The Equity Underwriting Market, Neil L. Fargher, L. Paige Fields, Michael S. Wilkins
The Impact On Ipo Assurance Fees Of Commercial Bank Entry Into The Equity Underwriting Market, Neil L. Fargher, L. Paige Fields, Michael S. Wilkins
School of Business Faculty Research
Changes in the provisions of the United States Banking Act of 1933 have allowed the entry of commercial banks into the initial public offering (IPO) underwriting market. In this paper, we examine the effect of commercial bank equity underwriting on the fees paid to auditors. We predict that IPO assurance fees will be higher for equity offerings underwritten by commercial banks than for offerings handled by traditional underwriters because (1) commercial banks are relatively inexperienced in bringing firms public, requiring additional assistance from accounting firms in the IPO process; (2) new entrants into the underwriting market may manage lower quality …