Work

Audit Quality and Banks' Assessment of Disclosed Accounting Information

Year: 2013

Type: article

Abstract: The objective of this paper is to investigate whether banks view the information on the off-balance sheet liabilities (specifically, operating leases) disclosed in the notes to the financial statements as more reliable when it is audited by brand name auditors (i.e. a Big 4 audit firm). To the extent that banks assess a higher likelihood that the financial statements could have material misstatements if it is not audited by a Big 4 audit firm, they should charge a higher interest rate on private loans. Our findings suggest that the impact of operating leases on the interest rate is higher if the firm is audited by non-Big 4 audit firms.

Source: European Accounting Review

DOI: 10.1080/09638180.2013.799740

Authors: Ling Chu, Robert Mathieu, Chima Mbagwu

Institution: Wilfrid Laurier University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funders: Wilfrid Laurier University, Social Sciences and Humanities Research Council of Canada

OpenAlex ID: W1974423398

FWCI: 1.497

Cites: 43

Cited by: 14

Related to: 10