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Investor protection, firm informational problems, big N auditors, and cost of debt around the world

Gul, Ferdinand A., Zhou, Gaoguang (Stephen) and Zhu, Xindong (Kevin) 2013, Investor protection, firm informational problems, big N auditors, and cost of debt around the world, Auditing: a journal of practice and theory, vol. 32, no. 3, pp. 1-30, doi: 10.2308/ajpt-50462.

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Title Investor protection, firm informational problems, big N auditors, and cost of debt around the world
Author(s) Gul, Ferdinand A.
Zhou, Gaoguang (Stephen)
Zhu, Xindong (Kevin)
Journal name Auditing: a journal of practice and theory
Volume number 32
Issue number 3
Start page 1
End page 30
Total pages 30
Publisher American Accounting Association
Place of publication Sarasota, Fla.
Publication date 2013-08-01
ISSN 0278-0380
1558-7991
Keyword(s) Social Sciences
Business, Finance
Business & Economics
investor protection
informational problems
information asymmetry
audit quality
cost of debt
CROSS-COUNTRY EVIDENCE
LEGAL LIABILITY REGIMES
EARNINGS QUALITY
INDUSTRY SPECIALIZATION
ACCOUNTING INFORMATION
CORPORATE GOVERNANCE
POLITICAL-ECONOMY
VALUE RELEVANCE
MARKET
DISCLOSURE
Summary This paper examines the effects of investor protection, firm informational problems (proxied by firm size, firm age, and the number of analysts following), and Big N auditors on firms' cost of debt around the world. Using data from 1994 to 2006 and over 90,000 firm-year observations, we find that the cost of debt is lower when firms are audited by Big N auditors, especially in countries with strong investor protection. Second, we find that firms with more informational problems (i.e., higher information asymmetry problems) benefit more from Big N auditors in terms of lower cost of debt only in countries with stronger investor protection.
Language eng
DOI 10.2308/ajpt-50462
Field of Research 150103 Financial Accounting
1501 Accounting, Auditing And Accountability
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2013, American Accounting Association
Persistent URL http://hdl.handle.net/10536/DRO/DU:30080009

Document type: Journal Article
Collection: Department of Accounting
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