Private lenders’ demand for audit

The Demand for Audit in Private Firms: Recent Large-Sample Evidence from the UK

Although theory suggests that companies would rationally select into audit even if it were not a legal requirement, many countries impose mandatory audits. This is arguably due to an audit having elements of a public good, which may result in not enough audits being purchased without regulatory intervention. The mandatory nature of public company audit has created problems for researchers wishi...

Tough Private Lenders Competing Against Soft State Banks

In many economies, small and medium-sized firms have no direct access to the financial markets but depend on bank loans. In the market for bank loans, competition is often distorted by state banks enjoying lower funding costs than private banks due to a state guarantee on their liabilities. In this paper, we argue that if the state bank’s guarantee is tied to an obligation to renegotiate loans ...

Audit Pricing in Private Firms

Prior research has examined audit pricing for publicly held firms and provided some evidence of a Big 8 premium in pricing. We investigate audit pricing among private firms for the first time, and we compare audit pricing for private and listed clients. The relatively great degree of dispersion in auditor choice (between Big 5 and non-Big 5 auditors) in our large sample of privately held audit ...

Audit Pricing in Private and Public Firms

Prior research has examined audit pricing for publicly held firms and provided some evidence of a Big 8 premium in pricing. We investigate audit pricing among private firms for the first time, and we compare audit pricing for private and public clients. We present evidence of a pricing premium, on average, for non-Big 5 auditors among large private clients after controlling for other effects. W...

Credit Scoring for Microenterprise Lenders