China’s IPO approval process co-opts audit firm representatives into the regulatory decision body, which creates conflict of interest and potential channels for corruption. We show evidence that co-opted auditors (i) do not differ in their auditing practice of listed firms from other auditors, but (ii) attract more borderline IPO clients that do not fully comply with the listing requirements, contributing to higher audit revenue growth, (iii) increase the chance of IPO approval for their borderline candidates, which (iv) afterwards underperform regular IPO stocks by 19 percent in terms of their average two-year buy and hold return. Moreover, (v) these borderline IPO firms show poorer profitability than matched firms, suggesting potential misrepresentation of firm prospects at the IPO stage.