Alrashidi, Rasheed and Baboukardos, Diogenis and Arun, Thankom (2021) Audit fees, non-audit fees and access to finance: Evidence from India. Journal of International Accounting, Auditing and Taxation, 43. p. 100397. DOI https://doi.org/10.1016/j.intaccaudtax.2021.100397
Alrashidi, Rasheed and Baboukardos, Diogenis and Arun, Thankom (2021) Audit fees, non-audit fees and access to finance: Evidence from India. Journal of International Accounting, Auditing and Taxation, 43. p. 100397. DOI https://doi.org/10.1016/j.intaccaudtax.2021.100397
Alrashidi, Rasheed and Baboukardos, Diogenis and Arun, Thankom (2021) Audit fees, non-audit fees and access to finance: Evidence from India. Journal of International Accounting, Auditing and Taxation, 43. p. 100397. DOI https://doi.org/10.1016/j.intaccaudtax.2021.100397
Abstract
This paper examines the impact of audit and non-audit fees on firms’ ability to access finance by reducing their capital constraints. Unlike previous studies, which examined this phenomenon in developed economies, this paper focuses on one of the largest, albeit developing, economies in the world: India. India is an interesting empirical setting due to major concerns over the quality of the audit services offered, even by the Big 4 accounting firms. Following the limited attention theory, we argue that, in such settings where the effect of the Big 4 label is limited, capital providers will turn their attention to the fees paid as a more reliable proxy for audit effort. Employing a dataset of listed non-financial Indian firms from 2002 to 2017, we hypothesise and empirically demonstrate that both audit and non-audit fees are negatively associated with firms’ financial constraints. The findings indicate that finance providers see audit and non-audit fees as signals of high-quality audits that enhance the credibility of financial statements and in turn positively impact firms’ access to finance. The results remained unchanged after a battery of robustness
Item Type: | Article |
---|---|
Additional Information: | Source info: Journal of International Accounting, Auditing and Taxation, Forthcoming |
Uncontrolled Keywords: | Access to finance; Audit fees; Non-audit fees; India |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 29 Mar 2021 11:46 |
Last Modified: | 30 Oct 2024 21:23 |
URI: | http://repository.essex.ac.uk/id/eprint/30108 |
Available files
Filename: ABA final manuscript.pdf
Licence: Creative Commons: Attribution-Noncommercial-No Derivative Works 3.0