The Value of Auditor Assurance: Evidence from Loan Pricing
This paper provides empirical evidence on the economic value of services provided by independent auditors by analyzing whether auditor association leads to reduced interest rates on revolving credit agreements. The relation between interest rates on revolving bank loans to small, private firms and t...
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| Veröffentlicht in: | Journal of accounting research 1998-04, Vol.36 (1), p.57-70 |
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| container_title | Journal of accounting research |
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| creator | Blackwell, David W. Noland, Thomas R. Winters, Drew B. |
| description | This paper provides empirical evidence on the economic value of services provided by independent auditors by analyzing whether auditor association leads to reduced interest rates on revolving credit agreements. The relation between interest rates on revolving bank loans to small, private firms and the degree of auditor association with the financial statements provided to the lender, controlling for other potentially important firm and loan characteristics is analyzed using multivariate regressions. It is found, on average, that firms purchasing audits pay lower interest rates after controlling for firm-specific risk factors and relevant loan characteristics, and that the marginal interest rate benefit of an audit is inversely related to firm size. |
| doi_str_mv | 10.2307/2491320 |
| format | Article |
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The relation between interest rates on revolving bank loans to small, private firms and the degree of auditor association with the financial statements provided to the lender, controlling for other potentially important firm and loan characteristics is analyzed using multivariate regressions. It is found, on average, that firms purchasing audits pay lower interest rates after controlling for firm-specific risk factors and relevant loan characteristics, and that the marginal interest rate benefit of an audit is inversely related to firm size.</description><identifier>ISSN: 0021-8456</identifier><identifier>EISSN: 1475-679X</identifier><identifier>DOI: 10.2307/2491320</identifier><identifier>CODEN: JACRBR</identifier><language>eng</language><publisher>Chicago: The Institute of Professional Accounting, Graduate School of Business, University of Chicago</publisher><subject>Accounting theory ; Agreements ; Audited financial statements ; Audits ; Bank assets ; Bank credit ; Bank loans ; Banking industry ; Banks ; Coefficients ; Collateral ; Commercial banks ; Cost control ; Credit risk ; Financial audits ; Interest rates ; Loan rates ; Loans ; Multivariate analysis ; Prime rate ; Research Reports ; Revolving credit ; Size of enterprise ; Studies ; Variables</subject><ispartof>Journal of accounting research, 1998-04, Vol.36 (1), p.57-70</ispartof><rights>Copyright 1998 Institute of Professional Accounting</rights><rights>Copyright Institute of Professional Accounting Spring 1998</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c376t-b3b203e25c61e5cc54eb7fcdb4acc47e8929830d61eaf3eab6e361a90dbcc9253</citedby></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/2491320$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/2491320$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,780,784,803,27924,27925,58017,58250</link.rule.ids></links><search><creatorcontrib>Blackwell, David W.</creatorcontrib><creatorcontrib>Noland, Thomas R.</creatorcontrib><creatorcontrib>Winters, Drew B.</creatorcontrib><title>The Value of Auditor Assurance: Evidence from Loan Pricing</title><title>Journal of accounting research</title><description>This paper provides empirical evidence on the economic value of services provided by independent auditors by analyzing whether auditor association leads to reduced interest rates on revolving credit agreements. The relation between interest rates on revolving bank loans to small, private firms and the degree of auditor association with the financial statements provided to the lender, controlling for other potentially important firm and loan characteristics is analyzed using multivariate regressions. It is found, on average, that firms purchasing audits pay lower interest rates after controlling for firm-specific risk factors and relevant loan characteristics, and that the marginal interest rate benefit of an audit is inversely related to firm size.</description><subject>Accounting theory</subject><subject>Agreements</subject><subject>Audited financial statements</subject><subject>Audits</subject><subject>Bank assets</subject><subject>Bank credit</subject><subject>Bank loans</subject><subject>Banking industry</subject><subject>Banks</subject><subject>Coefficients</subject><subject>Collateral</subject><subject>Commercial banks</subject><subject>Cost control</subject><subject>Credit risk</subject><subject>Financial audits</subject><subject>Interest rates</subject><subject>Loan rates</subject><subject>Loans</subject><subject>Multivariate analysis</subject><subject>Prime rate</subject><subject>Research Reports</subject><subject>Revolving credit</subject><subject>Size of enterprise</subject><subject>Studies</subject><subject>Variables</subject><issn>0021-8456</issn><issn>1475-679X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1998</creationdate><recordtype>article</recordtype><recordid>eNp10N9LwzAQB_AgCs4p_gtBBJ-ql6RJlr2VMX_AQB-m-FbS9KodWzOTVvC_N9K9-nQH9-GO-xJyyeCWC9B3PDdMcDgiE5ZrmSlt3o_JBICzbJZLdUrOYtwAgJGCTch8_Yn0zW4HpL6hxVC3vQ-0iHEItnM4p8vvtsbU0Sb4HV1529GX0Lq2-zgnJ43dRrw41Cl5vV-uF4_Z6vnhaVGsMie06rNKVBwEcukUQ-mczLHSjaur3DqXa5wZbmYC6jS1jUBbKRSKWQN15ZzhUkzJ1bh3H_zXgLEvN34IXTpZclCaK8NZQjcjcsHHGLAp96Hd2fBTMij_cikPuSR5PcpNTK_-y34Br0BeqQ</recordid><startdate>19980401</startdate><enddate>19980401</enddate><creator>Blackwell, David W.</creator><creator>Noland, Thomas R.</creator><creator>Winters, Drew B.</creator><general>The Institute of Professional Accounting, Graduate School of Business, University of Chicago</general><general>Blackwell Publishing Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>19980401</creationdate><title>The Value of Auditor Assurance: Evidence from Loan Pricing</title><author>Blackwell, David W. ; Noland, Thomas R. ; Winters, Drew B.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c376t-b3b203e25c61e5cc54eb7fcdb4acc47e8929830d61eaf3eab6e361a90dbcc9253</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1998</creationdate><topic>Accounting theory</topic><topic>Agreements</topic><topic>Audited financial statements</topic><topic>Audits</topic><topic>Bank assets</topic><topic>Bank credit</topic><topic>Bank loans</topic><topic>Banking industry</topic><topic>Banks</topic><topic>Coefficients</topic><topic>Collateral</topic><topic>Commercial banks</topic><topic>Cost control</topic><topic>Credit risk</topic><topic>Financial audits</topic><topic>Interest rates</topic><topic>Loan rates</topic><topic>Loans</topic><topic>Multivariate analysis</topic><topic>Prime rate</topic><topic>Research Reports</topic><topic>Revolving credit</topic><topic>Size of enterprise</topic><topic>Studies</topic><topic>Variables</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Blackwell, David W.</creatorcontrib><creatorcontrib>Noland, Thomas R.</creatorcontrib><creatorcontrib>Winters, Drew B.</creatorcontrib><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of accounting research</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Blackwell, David W.</au><au>Noland, Thomas R.</au><au>Winters, Drew B.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The Value of Auditor Assurance: Evidence from Loan Pricing</atitle><jtitle>Journal of accounting research</jtitle><date>1998-04-01</date><risdate>1998</risdate><volume>36</volume><issue>1</issue><spage>57</spage><epage>70</epage><pages>57-70</pages><issn>0021-8456</issn><eissn>1475-679X</eissn><coden>JACRBR</coden><abstract>This paper provides empirical evidence on the economic value of services provided by independent auditors by analyzing whether auditor association leads to reduced interest rates on revolving credit agreements. The relation between interest rates on revolving bank loans to small, private firms and the degree of auditor association with the financial statements provided to the lender, controlling for other potentially important firm and loan characteristics is analyzed using multivariate regressions. It is found, on average, that firms purchasing audits pay lower interest rates after controlling for firm-specific risk factors and relevant loan characteristics, and that the marginal interest rate benefit of an audit is inversely related to firm size.</abstract><cop>Chicago</cop><pub>The Institute of Professional Accounting, Graduate School of Business, University of Chicago</pub><doi>10.2307/2491320</doi><tpages>14</tpages></addata></record> |
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| identifier | ISSN: 0021-8456 |
| ispartof | Journal of accounting research, 1998-04, Vol.36 (1), p.57-70 |
| issn | 0021-8456 1475-679X |
| language | eng |
| recordid | cdi_proquest_journals_206726921 |
| source | JSTOR Archive Collection A-Z Listing |
| subjects | Accounting theory Agreements Audited financial statements Audits Bank assets Bank credit Bank loans Banking industry Banks Coefficients Collateral Commercial banks Cost control Credit risk Financial audits Interest rates Loan rates Loans Multivariate analysis Prime rate Research Reports Revolving credit Size of enterprise Studies Variables |
| title | The Value of Auditor Assurance: Evidence from Loan Pricing |
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