Firm Characteristics, Underwriter Reputation, Auditor Reputation and Underpricing

Abstract

This study aimed to examine the effect of firm characteristics, underwriter reputation, and the auditor reputation to underpricing. The level of underpricing measured by initial return. Firm characteristics that proxied by profitability, firm size, firm age, allocations IPO funds for investment and the type of industry. The results of this study indicate that only the auditor's reputation negatively affect underpricing and six other variables such as profitability, firm size, firm age, the allocation of IPO funds for investment, industry type and underwriter reputation does not affect the level of underpricing. Auditors prestigious will be reflected in the financial statements of a company that is more accurate and reliable, so it will be assessed positively by investors and underpricing will be lower.

Keywords: Firm characteristics, underwriter reputation, auditor reputation, underpricing