Title: Impact of agency costs on audit quality demand in initial public offerings

Authors: Soumaya Ayedi Chabchoub

Addresses: Faculty of Economics and Management of Nabeul, Department Management Sciences, University of Carthage Mrezga University Campus, Hammamet Road, 8000, Nabeul, Tunisia; FCF_University of Tunis elManar, Tunis, 1068, Tunisia

Abstract: This study aims at assessing the impact of agency costs on the demand for audit quality at the time of an Initial Public Offering in an emerging market. It is based on IPOs of the Tunis Stock Exchange for the period 2005-2015. We used a logit estimation of our selected model. The results show the importance of the impact of incumbent-potential shareholder agency costs on audit quality demand. However, shareholder-manager agency costs did not show any impact on the audit quality demand in an IPO context. The study is important because the Tunisian government has been encouraging Tunisian firms to list on the stock exchange by providing them with tax incentives, but no specific restrictions have been placed on the IPO prospectus auditing. It is therefore an arbitration between higher and less audit quality demand made by the newly introduced firm in order to control its costs.

Keywords: audit quality; initial public offering; agency costs; capital issue; Tunisian context.

DOI: 10.1504/IJAAPE.2023.132391

International Journal of Accounting, Auditing and Performance Evaluation, 2023 Vol.19 No.2, pp.220 - 233

Received: 25 Aug 2021
Accepted: 23 Mar 2022
Published online: 19 Jul 2023 *

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