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Loan Initiation and Auditing Pricing

Yutao Li

University of Lethbridge

Jennifer L. Kao

University of Alberta - Department of Accounting, Operations & Information Systems

Wenjun Zhang

Dalhousie University

January 15, 2012

CAAA Annual Conference 2012

In this study, we examine the effect of lenders’ certification for pricing of auditing services for the borrowers. We find that loan initiation is associated with significant reduction in auditing fees. The decrease in auditing fees is more pronounced for non-syndicated loans and when the lending amount is large. We also show that the certification effect is stronger among firms associated with higher ex ante risk. Our study contributes to both auditing and banking literature by documenting that lenders’ certification has significant impact on one of the important capital market participants, auditor.

Number of Pages in PDF File: 36

Keywords: auditing pricing, certification of lenders

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Date posted: January 18, 2012  

Suggested Citation

Li, Yutao and Kao, Jennifer L. and Zhang, Wenjun, Loan Initiation and Auditing Pricing (January 15, 2012). CAAA Annual Conference 2012. Available at SSRN: http://ssrn.com/abstract=1985727 or http://dx.doi.org/10.2139/ssrn.1985727

Contact Information

Yutao Li (Contact Author)
University of Lethbridge ( email )
Lethbridge, Alberta T1K5E8
Jennifer L. Kao
University of Alberta - Department of Accounting, Operations & Information Systems ( email )
Edmonton, Alberta T6G 2R6
780-492-7972 (Phone)
780-492-3325 (Fax)

Wenjun Zhang
Dalhousie University ( email )
Feedback to SSRN

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