It has been a common practice in Taiwan that the underwriters and their clients filing for IPOs will negotiate the underwriting share prices according to the referred prices calculated with a stipulated formula. Consequently, the management has incentive to manipulate accounting earnings to raise the referred underwriting prices because accounting earnings constitute the major part of the formula. This study is conducted with the utilization of the unique underwriting environment in Taiwan to investigate (I) whether the primary and secondary capital market take into account the quality of accounting earnings in the determination of underwriting prices, and (2) the performance of stock returns following IPOs. Empirical results indicate that the quality of accounting earnings has different impact on the determination of underwriting prices and the subsequent performances of stock returns under alternative IPO approaches.