Related Papers
Do audited firms have lower cost of debt
2018 •
Asif Huq
The purpose of this study is to investigate if audited financial statements add value for firms in the private debt market. Using an instrumental variable method, we find that firms with audited fi ...
The impact of voluntary audit on credit ratings: evidence from UK private firms
2012 •
Elisabeth Dedman
The Effect of Corporate Governance, and Audit Quality on Cost of Debt Financing
2011 •
Mohammad Kashanipour
SSRN Electronic Journal
Auditing Private Companies: What Do We Know?
2000 •
Ann Vanstraelen
The Impact of External Audit in Corporate Financial Distress
2020 •
SITI NOOR KHIKMAH
This paper is aimed at examining and analysing the impact of external audit on financial distress in Indonesian manufacturing companies. In addition, the samples used include data from manufacturing companies within the period 2014-2017, using purposive sampling method. A total of 128 companies were evaluated using panel data regression analysis, and the results showed the effect of going concern opinion, auditor switching and audit reputation on financial distress, although audit delay had no influence. Therefore, the implication of this research was to investigate the financial distress of companies in the capital market, especially in relation to the role of external audit.
The Accounting Review
The Demand for Financial Statements in an Unregulated Environment: An Examination of the Production and Use of Financial Statements by Privately Held Small Businesses
2009 •
Kristian Allee
The Demand for Audit in Private Firms: Recent Large-Sample Evidence from the UK
Clive Lennox
Although theory suggests that companies would rationally select into audit even if it were not a legal requirement, many countries impose mandatory audits. This is arguably due to an audit having elements of a public good, which may result in not enough audits being purchased without regulatory intervention. The mandatory nature of public company audit has created problems for researchers wishing to investigate the demand for voluntary audit. Recent events in the UK, however, have provided such an environment. In the UK, private companies must publicly file financial statements and, until recently, they had also to be audited. However, this requirement has now been relaxed for many private companies. We are therefore able to examine the determinants of voluntary audit in a large sample of companies for which we have financial statement data. We analyse a sample of 6274 recently exempt companies, following them for three years post-exemption. We use agency theory and prior evidence to generate our hypotheses and examine them using a more comprehensive set of explanatory variables than has previously been available in the literature. Our results indicate that companies are more likely to purchase voluntary audits if they have greater agency costs, are riskier, wish to raise capital, purchase non-audit services from their auditor, and exhibited greater demand for audit assurance in the mandatory audit regime. We also document a trend away from audit over time. Overall, our results strongly support the idea that companies choose to be audited when it is in their interests to do so.
Demand for Audit Quality in Small Private Firms: Evidence on Ownership Effects
2009 •
mervi niskanen
ECONOMICS AND BUSINESS ADMINISTRATION
The impact of audit opinion on cost of debt: Evidence from Vietnam
2021 •
Bao Chau
We consider whether the category of audit opinion an enterprise receives is pertained to the cost of debt of Vietnam corporations and how does it impact them. Proceeding from the data collected from 80 listed companies in the Vietnam stock exchange in the period of 2007 - 2017, we used a quantitative method to demonstrate the negative impact of modified audit opinion on the cost of debt. When companies receive a modified opinion, they have to pay higher interest rates and have a shorter maturity. From the results, this paper suggests some implications for the financial statement disclosure of listed firms and regulators in order to contribute to the transparency of the financial reports.
International Journal of Disclosure and Governance
Multiple audit mechanism, audit quality and cost of debt: Empirical evidence from a developing country Running head: Multiple audit mechanism, audit quality and cost of debt
2022 •
Ahmed A Elamer
This study focuses on the distinctive Egyptian setting, where firms could use multiple audit mechanism voluntarily or mandatory under certain circ*mstances. We investigate the effects on audit quality and cost of debt. A sample of 1699 firm-year observations of Egyptian listed firms for the 2009-2019 period is used. Abnormal accruals are employed as proxies of audit quality through abnormal working capital accruals and modified-Jones models. Results suggest that joint audits are not associated with both proxies of audit quality. In contrast, the dual audit is positively associated with abnormal accruals leading to conclude that dual audits are not providing a high level of audit quality. But this result holds only in companies with income decreasing discretionary accruals. These results are in line with litigation and reputational risk fears offering motivations for auditors to favour conservative accounting alternatives (i.e., income decreasing discretionary accruals). This implies that firms opting to employ dual audits have a higher level of earnings conservatism. Our evidence also indicates that the choice of multiple audit mechanisms especially joint audits is related to significant increases in the cost of debt, implying a higher perceived level of risk. Further, dual audits decrease the cost of debt only in companies with high earnings management. This study adds to the literature on whether the preference of income-increasing or income decreasing discretionary accruals is related to multiple audit mechanism and consequently affected the cost of debt. Together, our results support the view that voluntary joint audits are not related to audit quality in Egypt compared to mandatory dual audits, which consequently affect the pricing of debt. Our results have important implications for policymakers, audit firms and investors.
