Loan Initiation and Auditing Pricing

36 Pages Posted: 18 Jan 2012  

Yutao Li

University of Lethbridge

Jennifer L. Kao

Independent

Wenjun Zhang

Dalhousie University

Date Written: January 15, 2012

Abstract

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.

Keywords: auditing pricing, certification of lenders

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: https://ssrn.com/abstract=1985727 or http://dx.doi.org/10.2139/ssrn.1985727

Yutao Li (Contact Author)

University of Lethbridge ( email )

Lethbridge, Alberta T1K5E8
Canada

Jennifer L. Kao

Independent

No Address Available

Wenjun Zhang

Dalhousie University ( email )

Halifax
Canada

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