7,043
Views
10
CrossRef citations to date
0
Altmetric
Research Article

Audit fees and cost of debt: differences in the credibility of voluntary and mandatory audits

&
Pages 3071-3092 | Received 06 Jun 2019, Accepted 24 Sep 2019, Published online: 23 Oct 2019

References

  • Allee, K. D., & Yohn, T. L. (2009). The demand for financial statements in an unregulated environment: An examination of the production and use of financial statements by privately held small businesses. The Accounting Review, 84(1), 1–25. doi:10.2308/accr.2009.84.1.1
  • Angrist, J. D., & Pischke, J. S. (2009). Mostly harmless econometrics: An empiricist’s companion. Princeton, NJ: Princeton University Press.
  • Berger, A. N., & Udell, G. F. (2006). A more complete conceptual framework for SME finance. Journal of Banking & Finance, 30(11), 2945–2966. doi:10.1016/j.jbankfin.2006.05.008
  • Boone, J. P., Khurana, I. K., & Raman, K. K. (2010). Do the big 4 and the second-tier firms provide audits of similar quality? Journal of Accounting and Public Policy, 29(4), 330–352. doi:10.1016/j.jaccpubpol.2010.06.007
  • Cano Rodríguez, M., & Sánchez Alegría, S. (2012). The value of audit quality in public and private companies: Evidence from Spain. Journal of Management & Governance, 16(4), 683–706. doi:10.1007/s10997-011-9183-4
  • Cano Rodríguez, M., Sánchez Alegría, S., & Arenas Torres, P. (2016). The influence of auditor’s opinion and auditor’s reputation on the cost of debt: Evidence from private Spanish firms. Spanish Journal of Finance and Accounting, 45(1), 32–62.
  • Cano, M. (2010). Big auditors, private firms and accounting conservatism: Spanish evidence. European Accounting Review, 19, 131–159.
  • Cassar, G. (2011). Discussion of “the value of financial statement verification in debt financing: Evidence from private U.S. firms. Journal of Accounting Research, 49(2), 507–528. doi:10.1111/j.1475-679X.2011.00412.x
  • Cassar, G., Ittner, C. D., & Cavalluzzo, K. S. (2015). Alternative information sources and information asymmetry reduction: Evidence from small business debt. Journal of Accounting and Economics, 59(2–3), 242–263. doi:10.1016/j.jacceco.2014.08.003
  • Causholli, M., & Knechel, W. R. (2012). An examination of the credence attributes of an audit. Accounting Horizons, 26(4), 631–656. doi:10.2308/acch-50265
  • Clatworthy, M. A., Makepeace, G. H., & Peel, M. J. (2009). Selection bias and the big four premium: New evidence using Heckman and matching models. Accounting and Business Research, 39(2), 139–166. doi:10.1080/00014788.2009.9663354
  • Clatworthy, M. A., & Peel, M. J. (2007). The effect of corporate status on external audit fees: evidence from the UK. Journal of Business Finance & Accounting, 34(1–2), 169–201. doi:10.1111/j.1468-5957.2006.00658.x
  • Daske, H., Hail, L., Leuz, C., & Verdi, R. (2013). Adopting a label: Heterogeneity in the economic consequences around IAS/IFRS adoptions. Journal of Accounting Research, 51(3), 495–547. doi:10.1111/1475-679X.12005
  • DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3(3), 183–199. doi:10.1016/0165-4101(81)90002-1
  • Dedman, E., & Kausar, A. (2012). The impact of voluntary audit on credit ratings: Evidence from UK private firms. Accounting and Business Research, 42(4), 397–418. doi:10.1080/00014788.2012.653761
  • DeFond, M., & Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2–3), 275–326. doi:10.1016/j.jacceco.2014.09.002
  • Dhaliwal, D. S., Gleason, C. A., Heitzman, S., & Melendrez, K. D. (2008). Auditor fees and cost of debt. Journal of Accounting, Auditing & Finance, 23(1), 23–61. doi:10.1177/0148558X0802300103
  • Dulleck, U., & Kerschbamer, R. (2006). On doctors, mechanics, and computer specialists: the economics of credence goods. Journal of Economic Literature, 44(1), 5–42. doi:10.1257/002205106776162717
  • Esplin, A., Jamal, K., & Sunder, S. (2018). Demand for and assessment of audit quality in private companies. Abacus, 54(3), 319–352. doi:10.1111/abac.12138
  • Firth, M. (1997). The provision of non-audit services and the pricing of audit fees. Journal of Business Finance & Accounting, 24(3), 511–525.
  • Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), 125–152. doi:10.2308/ajpt-50006
  • Francis, J. R., & Wang, D. (2008). The joint effect of investor protection and Big 4 audits on earnings quality around the world. Contemporary Accounting Research, 25(1), 157–191. doi:10.1506/car.25.1.6
  • Gandía, J. L., & Huguet, D. (2018). Differences in audit pricing between voluntary and mandatory audits. Academia Revista Latinoamericana de Administración, 31(2), 336–359. doi:10.1108/ARLA-01-2016-0007
  • Gill de Albornoz Noguer, B., & Muñoz, M. I. (2007). La calidad de los ajustes por devengo no afecta al coste de la deuda de las pymes españolas. Investigaciones Económicas, 31(1), 79–117.
  • Hay, D. C., & Knechel, W. R. (2010). The effects of advertising and solicitation on audit fees. Journal of Accounting and Public Policy, 29(1), 60–81. doi:10.1016/j.jaccpubpol.2009.10.001
  • Hope, O. K., & Langli, J. C. (2010). Auditor independence in a private firm and low litigation risk setting. The Accounting Review, 85(2), 573–605. doi:10.2308/accr.2010.85.2.573
  • Huguet, D., & Gandía, J. L. (2014). Cost of debt capital and audit in Spanish SMEs. Spanish Journal of Finance and Accounting/Revista Española de Financiación y Contabilidad, 43(3), 266–289. doi:10.1080/02102412.2014.942154
  • Huguet, D., & Gandía, J. L. (2016). Audit and earnings management in Spanish SMEs. Business Research Quarterly, 19(3), 171–187. doi:10.1016/j.brq.2015.12.001
  • Instituto de Contabilidad y Auditoría de Cuentas, Ministerio de Economía y Empresa. (2018). Situación de la auditoría en España 2018 (Situation of auditing in Spain 2018). http://www.icac.meh.es/Documentos/INFORMES/01.Situaci%C3%B3n.%20de%20la%20Auditor%C3%ADa%20en%20Espa%C3%B1a/08.A%C3%B1o%202018.pdf.
  • Jiang, L., & Zhou, H. (2017). The role of audit verification in debt contracting: evidence from covenant violations. Review of Accounting Studies, 22(1), 469–501. doi:10.1007/s11142-016-9383-x
  • Karjalainen, J. (2011). Audit quality and cost of debt capital for private firms: Evidence from Finland. International Journal of Auditing, 15(1), 88–108. doi:10.1111/j.1099-1123.2010.00424.x
  • Kim, J. B., Simunic, D. A., Stein, M. T., & Yi, C. H. (2011). Voluntary audits and the cost of debt capital for privately held firms: Korean evidence. Contemporary Accounting Research, 28(2), 585–615. doi:10.1111/j.1911-3846.2010.01054.x
  • Knechel, W. R., Niemi, L., & Sundgren, S. (2008). Determinants of auditor choice: Evidence from a small client market. International Journal of Auditing, 12 (1), 65–88. doi:10.1111/j.1099-1123.2008.00370.x
  • Larcker, D. F., & Rusticus, T. O. (2010). On the use of instrumental variables. Journal of Accounting and Economics, 49(3), 186–205. doi:10.1016/j.jacceco.2009.11.004
  • Lennox, C., & Pittman, J. A. (2011). Voluntary audits versus mandatory audits. The Accounting Review, 86(5), 1655–1678. doi:10.2308/accr-10098
  • Lennox, C., Francis, J. R., & Wang, Z. (2012). Selection models in accounting research. The Accounting Review, 87(2), 589–616. doi:10.2308/accr-10195
  • Mareque, M., López-Corrales, F., & Pedrosa, A. (2017). Audit reporting for going concern in Spain during the global financial crisis. Economic Research-Ekonomska Istraživanja, 30(1), 154–183. doi:10.1080/1331677X.2017.1305787
  • Minnis, M. (2011). The value of financial statement verification in debt financing: Evidence from private U.S. firms. Journal of Accounting Research, 49(2), 457–506. doi:10.1111/j.1475-679X.2011.00411.x
  • Nickell, S. (1981). Biases in dynamic models with fixed effects. Econometrica, 49 (6), 1417–1426. doi:10.2307/1911408
  • Peel, M. J., & Roberts, R. (2003). Audit fee determinants and auditor premiums: Evidence from the micro-firm sub-market. Accounting and Business Research, 33(3), 207–233. doi:10.1080/00014788.2003.9729647
  • Pittman, J. A., & Fortin, S. (2004). Auditor choice and the cost of debt capital for newly public firms. Journal of Accounting and Economics, 37(1), 113–136. doi:10.1016/j.jacceco.2003.06.005
  • Sundgren, S., & Svanström, T. (2013). Audit office size, audit quality and audit pricing: Evidence from small- and medium-sized enterprises. Accounting and Business Research, 43(1), 31–55. doi:10.1080/00014788.2012.691710
  • Vander Bauwhede, H., De Meyere, M., & Van Cauwenberge, P. (2015). Financial reporting quality and the cost of debt of SMEs. Small Business Economics, 45(1), 149–164. doi:10.1007/s11187-015-9645-1
  • Wintoki, M. B., Linck, J. S., & Netter, J. M. (2012). Endogeneity and the dynamics of internal corporate governance. Journal of Financial Economics, 105(3), 581–606. doi:10.1016/j.jfineco.2012.03.005
  • Zaman Groff, M., Trobec, D., & Igličar, A. (2017). Audit fees and the salience of financial crisis: evidence from Slovenia. Economic Research-Ekonomska Istraživanja, 30(1), 922–938. doi:10.1080/1331677X.2017.1311233