Footnote:
In: REFC – Spanish Journal of Finance and Accounting (Forthcoming)
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 21, 2015 erstellt
Description:
This paper addresses the relevance of auditor's opinion and auditor's reputation for the creditors of private companies in an environment of low demand for audit quality. By employing archival data from private Spanish firms, we find that Big-4 auditors' clients bear a lower cost of debt, showing that the selection of a high-quality auditor is relevant for the creditors of the company. We also demonstrate that the content of audit reports is relevant for creditors, as they require a higher cost of debt from firms that have obtained a qualified audit report. The influence of auditor's opinion on the cost of debt does not depend on type of auditor, suggesting that Big-4 auditors' clients benefit from their auditor's reputation, even when they receive a qualified audit report