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
Citation
MA, Zhiming; STICE, Derrald; and WANG, Rencheng.
Auditor choice and information asymmetry: Evidence from international syndicated loans. (2019). Accounting and Business Research. 49, (4), 365-399.
Available at: https://ink.library.smu.edu.sg/soa_research/1814
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1080/00014788.2018.1507810
