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Medientyp:
E-Artikel
Titel:
Affiliation of Indonesian audit firms with Big4 and second‐tier audit firms and the cost of debt
Beteiligte:
Kurniawati, Heny;
Van Cauwenberge, Philippe;
Vander Bauwhede, Heidi
Erschienen:
Wiley, 2019
Erschienen in:
International Journal of Auditing, 23 (2019) 3, Seite 387-402
Sprache:
Englisch
DOI:
10.1111/ijau.12167
ISSN:
1090-6738;
1099-1123
Entstehung:
Anmerkungen:
Beschreibung:
This paper documents that in Indonesia, where litigation risk is low and foreign audit firms can only enter the market through affiliation with a local audit firm, the appointment of a local audit firm affiliated either with a Big4 or a second‐tier audit firm reduces the cost of debt for listed companies significantly. This finding holds irrespective of the risk profile of the client and is independent of whether or not we control for endogenous auditor choice. There is less conclusive evidence of a difference in the magnitude of the effect of Big4 affiliation versus affiliation with a second‐tier audit firm. Our evidence is in line with the idea that Big4 and second‐tier audit firms are perceived as applying uniform quality criteria around the world, regardless of the local circumstances in which they operate.