Joint audit, political connections and cost of debt capital
MetadataShow full item record
We investigate the association between joint audit and cost of debt for a sample of non-financial, publicly listed firms from the Gulf Cooperation Council (GCC) countries. Although the conventional wisdom suggests that "two heads are better than one", empirical evidence on the beneficial impact of joint audit has not been convincingly documented. We attempt to shed further insights into this debate, using data from the GCC countries. We document a significantly negative effect of joint audit on cost of debt in the GCC countries. This effect is more pronounced in cases where at least one of the joint audit firms is a Big 4 auditor. We then investigate whether political connections with royal families moderate the association between joint audit and cost of debt. Our results suggest that the beneficial effects of joint audits, in terms of a lower cost of debt, are greater in firms with such political connections.
Showing items related by title, author, creator and subject.
Rusmin, Rusmin; Evans, John (2017)Purpose: The purpose of this paper is to empirically examine the relation between two dimensions of auditor quality, namely, auditor industry specialization and auditor reputation and the audit report lag. Design/method ...
Chikolwa, Bwembya C (2008)According to the Reserve Bank of Australia (2006) the increased supply of Commercial Mortgage-Backed Securities (CMBS), with a range of subordination, has broadened the investor base in real estate debt markets and reduced ...
Habib, A.; Gong, R.; Hossain, Mahmud (2013)Purpose – The purpose of this research note is to examine the association between overvalued equities and audit fees in the USA. Design/methodology/approach – The paper employs a standard audit fee regression model ...