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The theory presented suggests that underwriters are both advisors and independent agents in the issuerʼs attempt to send “signals” of quality to investors by making pre-IPO organizational changes. These pre-IPO gambits are intended to increase IPO proceeds, and preemptively address potential investor concerns that would deter them from subscribing. These organizational changes initially can financially benefit founders, early investors and underwriters. But they can also have a longterm impact that some issuers, especially founders, would prefer to avoid. Utilizing signaling and resource-based power, we find that underwriter power is significantly associated with making pre-IPO gambits and lower levels of underpricing.

Man has been seeking an ideal existence for a very long time. In this existence, justice, love, and peace are no longer words, but actual experiences. How ever, with the American preemptive invasion and occupation of Afghanistan and Iraq and the subsequent prisoner abuse, such an existence seems to be farther and farther away from reality. The purpose of this work is to stop this dangerous trend by promoting justice, love, and peace through a change of the paradigm that is inconsistent with justice, love, and peace. The strong paradigm that created the strong nation like the U.S. and the strong man like George W. Bush have been the culprit, rather than the contributor, of the above three universal ideals. Thus, rather than justice, love, and peace, the strong paradigm resulted in in justice, hatred, and violence. In order to remove these three and related evils, what the world needs in the beginning of the third millenium is the weak paradigm. Through the acceptance of the latter paradigm, the golden mean or middle paradigm can be formulated, which is a synergy of the weak and the strong paradigm. In order to understand properly the meaning of these paradigms, however, some digression appears necessary.

Conflicting results have emerged from several past studies as to whether bankruptcy prediction models are able to forecast corporate failure more accurately than auditors’ going‐concern opinions. Nevertheless, the last decade has seen improved modelling of the path‐to‐failure of financially distressed firms over earlier static models of bankruptcy. In the light of the current crisis facing the auditing profession, this study evaluates the efficacy of auditors’ going‐concern opinions in comparison to two bankruptcy prediction models. Bankrupt firms in the U.S. service and trade industry sectors were used to compare model predictions against the auditors’ going‐concern opinion for two years prior to firm failure. The two models are the well‐known Altman (1968) Multiple Discriminant Analysis (MDA) model that includes only financial ratio variables in its formulation and the newer, temporal logit model of Cybinski (2000, 2003) that includes explicit factors of the business cycles in addition to variables internal to the firm. The results show overall better bankruptcy classification rates for the temporal model than for the Altman model or audit opinion.