Audit Quality and Cost of Debt:Evidence from Lending Relationships

• Main Authors: An-Chi Fan, 范安綺
• Other Authors: Yao-Tsung Chen
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/477u48

碩士 === 國立臺灣大學 === 會計學研究所 === 102 === Following Causholli and Knechel (2012), this thesis uses a sample of listed and OTC firms in Taiwan from 2001 to 2007 to examine how high quality audits reduce a firms’ cost of debt under different circumstances. The thesis extends Causholli and Knechel (2012) by considering industry, lending relationships and board governance to analyze the relationship between audit quality and costs of debt. The thesis uses the life-cycle model of financing to analyze firms’ lending relationships before they become listed and OTC firms, and separates total samples into technology firms and non-technology firms. The empirical results indicate that at the time that firms become listed and OTC firms, a firm’s private age is not significantly related to the cost of debt, and the audit quality isn’t significantly related to lowering the cost of debt. Besides, the effect of audit quality isn’t larger for firms in high tech industry sector. Among firms in the non-tech sector, I find that firms that are young at the time that they become listed and OTC firms pay higher cost of debt. Among firms in the tech sector, I find that firms that are young at the time that they become listed and OTC firms pay higher cost of debt, and the benefit of hiring a high quality auditor is larger in young firms. Finally, I find that there is a complementary relationship between audit quality and board governance in reducing the cost of debt.