Publicação
The impact of the characteristics of the audit committee on the corporate cost of debt
| Resumo: | The audit committee has a mission to reduce information asymmetry, improving the quality of reporting and strengthening investment decisions. Therefore, we can expect that audit committee characteristics will influence financial reporting users’ decisions. One of the main users of financial information is the debtholder, having to decide whether he or she is available to provide loans or other forms of credit and at what cost. Consequently, it is relevant to investigate if the role of the audit committee has any influence on the decision-making process of the debtholder. In this context, this study aims to analyse the association between the Audit Committee characteristics and the cost of debt for the FTSE100 companies during the years 2018 and 2019. We investigate if audit committee characteristics such as industry expertise, chair’s tenure, meeting frequency, presence of women, auditor’s tenure, and audit fees have any impact on the cost of debt. We find that our measures of audit committee are not related to the cost of debt, except for the chair’s gender of the audit committee, which is negatively and significantly related to the corporate cost of debt. In terms of audit, this study provides evidence that debtholders care more about external auditors than internal auditors. |
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| Autores principais: | Santos, Inês Borges |
| Assunto: | Cost of debt Audit Committee characteristics FTSE100 Custo da dívida das empresas características do Comité de Auditoria |
| Ano: | 2021 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório da Universidade de Lisboa |
| Resumo: | The audit committee has a mission to reduce information asymmetry, improving the quality of reporting and strengthening investment decisions. Therefore, we can expect that audit committee characteristics will influence financial reporting users’ decisions. One of the main users of financial information is the debtholder, having to decide whether he or she is available to provide loans or other forms of credit and at what cost. Consequently, it is relevant to investigate if the role of the audit committee has any influence on the decision-making process of the debtholder. In this context, this study aims to analyse the association between the Audit Committee characteristics and the cost of debt for the FTSE100 companies during the years 2018 and 2019. We investigate if audit committee characteristics such as industry expertise, chair’s tenure, meeting frequency, presence of women, auditor’s tenure, and audit fees have any impact on the cost of debt. We find that our measures of audit committee are not related to the cost of debt, except for the chair’s gender of the audit committee, which is negatively and significantly related to the corporate cost of debt. In terms of audit, this study provides evidence that debtholders care more about external auditors than internal auditors. |
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