Title: Impact of underwriter reputation on the accounting conservatism of the IPO firm: South Korean cases

Authors: Na-Youn Kim; Kook-Jae Hwang

Addresses: Sogang Business School, Sogang University, Seoul, South Korea ' Sogang Business School, Sogang University, Seoul, South Korea

Abstract: We empirically examined whether underwriter reputation is associated with the level of accounting conservatism of IPO firms in South Korea. Financial institutions such as underwriters are motivated to maintain long-term business relationships with firms that appointed them as underwriters, and this relationship is considered more important to ensure a successful IPO process for IPO firms. However, only scant research exists that investigated the relationship between underwriter reputation and the level of accounting conservatism of an IPO firm. This research examined this relationship using both KOSPI and KOSDAQ markets in South Korea. We hypothesised that underwriter reputation is correlated with the level of accounting conservatism of an IPO firm. We examined our hypothesis using a sample of newly listed firms in the KOSPI and KOSDAQ markets from 2006 to 2014. The statistically significant result is that an underwriter with a good reputation indicates an IPO firm with higher accounting conservatism.

Keywords: IPO; accounting conservatism; reputation.

DOI: 10.1504/IJEPEE.2018.093950

International Journal of Economic Policy in Emerging Economies, 2018 Vol.11 No.3, pp.238 - 247

Available online: 27 Jul 2018 *

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