The effects of industry expertise on cost of debt: An individual auditor-level analysis

Ying Chieh Wang, Hua Wei Huang, Jeng Ren Chiou, Yu Chieh Huang

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)322-334
Number of pages13
JournalAsian Review of Accounting
Volume25
Issue number3
DOIs
Publication statusPublished - 2017 Jan 1

Fingerprint

Expertise
Industry
Auditors
Cost of debt
Industry specialization
Asia
Investors
Design methodology
Proxy variables
Interest rates
Assets
Market share
Empirical evidence
Debt
Audit firms
Policy implications

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance

Cite this

Wang, Ying Chieh ; Huang, Hua Wei ; Chiou, Jeng Ren ; Huang, Yu Chieh. / The effects of industry expertise on cost of debt : An individual auditor-level analysis. In: Asian Review of Accounting. 2017 ; Vol. 25, No. 3. pp. 322-334.
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The effects of industry expertise on cost of debt : An individual auditor-level analysis. / Wang, Ying Chieh; Huang, Hua Wei; Chiou, Jeng Ren; Huang, Yu Chieh.

In: Asian Review of Accounting, Vol. 25, No. 3, 01.01.2017, p. 322-334.

Research output: Contribution to journalArticle

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