z-logo
Premium
Cross‐Country Evidence on the Importance of Auditor Choice to Corporate Debt Maturity
Author(s) -
El Ghoul Sadok,
Guedhami Omrane,
Pittman Jeffrey A.,
Rizeanu Sorin
Publication year - 2015
Publication title -
contemporary accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.769
H-Index - 99
eISSN - 1911-3846
pISSN - 0823-9150
DOI - 10.1111/1911-3846.12168
Subject(s) - maturity (psychological) , business , audit , debt , accounting , sample (material) , creditor , monetary economics , agency cost , quality audit , debt ratio , financial system , economics , finance , corporate governance , shareholder , political science , chemistry , chromatography , law
We examine the importance of Big Four audits in reducing agency costs evident in corporate debt maturity worldwide. Analyzing a large sample of public firms from 42 countries reveals that the fraction of long‐term debt in firms' capital structures rises with the presence of a Big Four auditor, suggesting that higher‐quality audits substitute for short‐term debt for monitoring purposes. In additional analyses, we find that the role that auditor choice plays in debt maturity is concentrated in firms from countries with strong legal institutions governing property rights and creditor rights. Collectively, our research implies that Big Four audits matter to corporate debt maturity, although the impact is isolated in firms operating in countries with more protective legal regimes.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here