Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 21, 2023 erstellt
Beschreibung:
Customer concentration increases supplier firms’ operational and financial risks. We posit that, for supplier firms sharing a common auditor with their major customer, creditors would perceive that the financial statements of the suppliers better reflect the inherent uncertainties and information asymmetry risks stemming from the exposure and reliance on the major customers. Hence, they would impose lower cost of debt. Consistent with this, we find robust evidence that supplier firms sharing the same auditor with their major customers enjoy significantly lower cost of bank debt. This effect is more pronounced for supplier firms audited by the same audit office as their major customer and having a higher degree of reliance on their major customers. The findings contribute to and extend the supply chain and auditing strands of the literature with respect to the common auditor attribute, while they also have important practical implications