TY - JOUR
T1 - Investor Protection, Firm Informational Problems, Big N Auditors, and Cost of Debt around the World
AU - Gul, Ferdinand A.
AU - Zhou, Gaoguang (Stephen)
AU - Zhu, Xindong (Kevin)
N1 - Publisher copyright:
© 2013 American Accounting Association. All rights reserved
PY - 2013/8
Y1 - 2013/8
N2 - This paper examines the effects of investor protection, firm informational problems (proxied by firm size, firm age, and the number of analysts following), and Big N auditors on firms' cost of debt around the world. Using data from 1994 to 2006 and over 90,000 firm-year observations, we find that the cost of debt is lower when firms are audited by Big N auditors, especially in countries with strong investor protection. Second, we find that firms with more informational problems (i.e., higher information asymmetry problems) benefit more from Big N auditors in terms of lower cost of debt only in countries with stronger investor protection.
AB - This paper examines the effects of investor protection, firm informational problems (proxied by firm size, firm age, and the number of analysts following), and Big N auditors on firms' cost of debt around the world. Using data from 1994 to 2006 and over 90,000 firm-year observations, we find that the cost of debt is lower when firms are audited by Big N auditors, especially in countries with strong investor protection. Second, we find that firms with more informational problems (i.e., higher information asymmetry problems) benefit more from Big N auditors in terms of lower cost of debt only in countries with stronger investor protection.
UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-84880808451&partnerID=MN8TOARS
U2 - 10.2308/ajpt-50462
DO - 10.2308/ajpt-50462
M3 - Journal article
SN - 0278-0380
VL - 32
SP - 1
EP - 30
JO - Auditing
JF - Auditing
IS - 3
ER -