TY - JOUR
T1 - The effects of industry expertise on cost of debt
T2 - An individual auditor-level analysis
AU - Wang, Ying Chieh
AU - Huang, Hua Wei
AU - Chiou, Jeng Ren
AU - Huang, Yu Chieh
N1 - Publisher Copyright:
© Emerald Publishing Limited.
PY - 2017
Y1 - 2017
N2 - Purpose - The purpose of this paper is to examine the association between the cost of debt (COD) and auditor industry expertise using Taiwanese data. Since previous studies (Li et al., 2010) have only examined the relation between industry specialization and COD at the audit firm level in western countries, the authors further examine the association between industry specialization and COD at the individual auditor level in an Asian context. Design/methodology/approach - The authors use the interest rate on the firm's debt as a proxy variable for the COD (Francis, Khurana and Pereira, 2005). The authors adopt three different methods to measure industry specialization, which consist of the auditors' market share in terms of client sales and number of clients, and client assets. Findings - The results indicate that the clients of industry specialists at individual auditor levels have a lower COD. Originality/value - First, the authors extend the research of Li et al. (2010) and find that the clients of individual auditor industry specialists also have a lower COD. Second, the authors also believe the evidence on the effects of industry expertise at the individual auditor level may have policy implications for regulators and public investors. Finally, in contrast to works carried out in the US market, the authors provide empirical evidence for the relation between industry specialization and COD in an Asian market.
AB - Purpose - The purpose of this paper is to examine the association between the cost of debt (COD) and auditor industry expertise using Taiwanese data. Since previous studies (Li et al., 2010) have only examined the relation between industry specialization and COD at the audit firm level in western countries, the authors further examine the association between industry specialization and COD at the individual auditor level in an Asian context. Design/methodology/approach - The authors use the interest rate on the firm's debt as a proxy variable for the COD (Francis, Khurana and Pereira, 2005). The authors adopt three different methods to measure industry specialization, which consist of the auditors' market share in terms of client sales and number of clients, and client assets. Findings - The results indicate that the clients of industry specialists at individual auditor levels have a lower COD. Originality/value - First, the authors extend the research of Li et al. (2010) and find that the clients of individual auditor industry specialists also have a lower COD. Second, the authors also believe the evidence on the effects of industry expertise at the individual auditor level may have policy implications for regulators and public investors. Finally, in contrast to works carried out in the US market, the authors provide empirical evidence for the relation between industry specialization and COD in an Asian market.
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U2 - 10.1108/ARA-08-2014-0092
DO - 10.1108/ARA-08-2014-0092
M3 - Article
AN - SCOPUS:85029461396
SN - 1321-7348
VL - 25
SP - 322
EP - 334
JO - Asian Review of Accounting
JF - Asian Review of Accounting
IS - 3
ER -