Being private, Big 4 auditors, and debt raising

Wen Hua Sharpe; Peter Carey; Hong Feng Zhang

doi:10.1111/acfi.12969

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Being private, Big 4 auditors, and debt raising

Journal article

Open access

Peer reviewed

Being private, Big 4 auditors, and debt raising

Wen Hua Sharpe, Peter Carey and Hong Feng Zhang

Accounting & Finance, Vol.63(2), pp.2295-2345

2023

DOI: https://doi.org/10.1111/acfi.12969

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Abstract

auditor choice

debt raising

information asymmetry

private firms

public firms

This study investigates the role of auditor choice (Big 4/Non‐Big 4) in debt financing for private and public firms. We find private firms have less access to debt than public firms, and Big 4 auditors support debt raising in both private and public firms. Consistent with private firms facing greater information asymmetry, Big 4 auditors are more important for debt raising in private firms than in public firms. The benefit of appointing Big 4 auditors for private firms' debt raising is greater in the opaque information environment of the global financial crisis. It is also greater when firms are smaller, younger, or have poorer financial reporting quality. We also find evidence consistent with Big 4 auditors mitigating agency conflicts and enhancing debt raising when ownership concentration is higher in private firms.

Details

Title: Being private, Big 4 auditors, and debt raising
Authors: Wen Hua Sharpe (Corresponding Author) - Federation University
Peter Carey (Author) - Deakin University
Hong Feng Zhang (Author) - Deakin University
Publication details: Accounting & Finance, Vol.63(2), pp.2295-2345
Publisher: John Wiley & Sons, Inc.
Date published: 2023
DOI: 10.1111/acfi.12969
ISSN: 1467-629X; 0810-5391
Copyright note: © 2022 The Authors. Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Organisation Unit: School of Business and Creative Industries
Language: English
Record Identifier: 99741788802621
Output Type: Journal article

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Collaboration types: Domestic collaboration
Web Of Science research areas: Business, Finance