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Do audited firms have lower cost of debt?: Evidence from Sweden
Dalarna University, School of Technology and Business Studies, Microdata Analysis.
Dalarna University, School of Technology and Business Studies, Economics.
Dalarna University, School of Technology and Business Studies, Business Administration and Management. Högskolan i Gävle.ORCID iD: 0000-0002-5043-6289
Dalarna University, School of Technology and Business Studies, Economics.
2017 (English)Conference paper, Oral presentation with published abstract (Refereed)
Abstract [en]

The purpose of this study is to investigate if audited financial statements adds any value for firm in the private debt market. Using an instrumental variable method, we find that firms with audited financial statements on average save 1.66 percentage points on cost of debt compared to firms with unaudited financial statements. We also find that using the big, well known auditing firms does not yield additional cost of debt benefits. Lastly, we find that the effect of audit on cost of debt varies between industries. As such, we find that firms in industries that have been identified in previous studies to have a more complex information structure and therefore more complex auditing process also save more on cost of debt relative to other industries when being audited. 

Place, publisher, year, edition, pages
2017.
Keyword [en]
Cost of capital, cost of debt, voluntary audit, growth
National Category
Business Administration
Research subject
Complex Systems – Microdata Analysis
Identifiers
URN: urn:nbn:se:du-24253OAI: oai:DiVA.org:du-24253DiVA: diva2:1073591
Conference
European Accounting Association Annual Congress May 9-12, 2017, Valencia, Spain
Available from: 2017-02-11 Created: 2017-02-11 Last updated: 2018-01-25Bibliographically approved

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http://eaa2017.eaacongress.org/r/abstracts

Authority records BETA

Huq, AsifDaunfeldt, Sven-OlovHartwig, FredrikRudholm, Niklas

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf