Publication Type

Journal Article

Version

submittedVersion

Publication Date

6-2019

Abstract

Analyzing a large sample of non-US public firms from 31 countries that obtain private loans, we find that loan syndicates that lend to borrowers that employ Big N auditors are larger and less concentrated and that the lead arrangers and largest investors of these syndicates are able to hold a lower proportion of the loan after issuance. Further analysis demonstrates that this effect exists only in countries with strong creditor rights and in those countries with high levels of societal trust, suggesting that both sound formal and informal institutional factors are prerequisites for lenders and borrowers to benefit from differential audit quality on loan syndicate structure efficiency. Furthermore, we find that the loan syndicate structure benefits for borrowers that employ Big N auditors are higher for borrowers with greater information asymmetry problems, but we do not find that Big N audits are able to address the information asymmetry and moral hazard issues between the lenders themselves.

Keywords

big N auditors, international debt markets, loan syndicate structure, creditor rights, trust

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

Accounting and Business Research

Volume

49

Issue

4

First Page

365

Last Page

399

ISSN

0001-4788

Identifier

10.1080/00014788.2018.1507810

Publisher

Taylor & Francis (Routledge): SSH Titles

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1080/00014788.2018.1507810

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