External audit quality and firms' credit score

Alaa Mansour Zalata, Hany Elzahar, Craig McLaughlin

Research output: Contribution to journalArticle

1 Citation (Scopus)
3 Downloads (Pure)

Abstract

Using a sample of UK firms, we investigate whether external audit quality has an informational role for firms credit score. In our general research setting, we could not find any evidence on the association between firms’ credit score and external audit quality. However, when firms are suspected to be engaged in managerial misstatements, firms’ credit score seems to be associated with external audit quality. In particular, suspected firms get high credit score when they are audited by one of industry-specialised auditors. In addition, credit rating agencies penalise suspect firms when they pay high audit and non-audit fees.

Original languageEnglish
Article number1724063
Number of pages16
JournalCogent Business and Management
Volume7
Issue number1
DOIs
Publication statusPublished - 13 Feb 2020

Keywords

  • audit fee
  • audit quality
  • credit rating
  • industry-specialised auditors
  • non-audit fee

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