Auditor choice and information asymmetry: Evidence from international syndicated loans

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...

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Main Authors: MA, Zhiming, STICE, Derrald, WANG, Rencheng
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2019
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Online Access:https://ink.library.smu.edu.sg/soa_research/1814
https://ink.library.smu.edu.sg/context/soa_research/article/2841/viewcontent/Auditor_Choice_IA_sv.pdf
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spelling sg-smu-ink.soa_research-28412020-02-28T03:03:24Z Auditor choice and information asymmetry: Evidence from international syndicated loans MA, Zhiming STICE, Derrald WANG, Rencheng 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. 2019-06-07T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1814 info:doi/10.1080/00014788.2018.1507810 https://ink.library.smu.edu.sg/context/soa_research/article/2841/viewcontent/Auditor_Choice_IA_sv.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University big N auditors international debt markets loan syndicate structure creditor rights trust Accounting Corporate Finance
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic big N auditors
international debt markets
loan syndicate structure
creditor rights
trust
Accounting
Corporate Finance
spellingShingle big N auditors
international debt markets
loan syndicate structure
creditor rights
trust
Accounting
Corporate Finance
MA, Zhiming
STICE, Derrald
WANG, Rencheng
Auditor choice and information asymmetry: Evidence from international syndicated loans
description 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.
format text
author MA, Zhiming
STICE, Derrald
WANG, Rencheng
author_facet MA, Zhiming
STICE, Derrald
WANG, Rencheng
author_sort MA, Zhiming
title Auditor choice and information asymmetry: Evidence from international syndicated loans
title_short Auditor choice and information asymmetry: Evidence from international syndicated loans
title_full Auditor choice and information asymmetry: Evidence from international syndicated loans
title_fullStr Auditor choice and information asymmetry: Evidence from international syndicated loans
title_full_unstemmed Auditor choice and information asymmetry: Evidence from international syndicated loans
title_sort auditor choice and information asymmetry: evidence from international syndicated loans
publisher Institutional Knowledge at Singapore Management University
publishDate 2019
url https://ink.library.smu.edu.sg/soa_research/1814
https://ink.library.smu.edu.sg/context/soa_research/article/2841/viewcontent/Auditor_Choice_IA_sv.pdf
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