Hiring a High-quality Auditor and debt maturity structure: Evidence from Iranian firms

Hiring a High-quality Auditor and debt maturity structure: Evidence from Iranian firms

Ahmadi, Mobina
Gerayli, Mehdi Safari

Abstract: The current research is an attempt to offer new insights into the association between hiring high-quality audit firms and corporate debt maturity structure. To this end, 94 firms listed on the Tehran Stock Exchange were scrutinized for the period 2011-2015. To test the research hypotheses, multiple regression and data panel were employed. The findings confirm that a high-quality audit firm can enhance the debt maturity. The results of testing the research hypothesis point to a significant correlation between the hiring of a high-quality audit firm and corporate debt maturity structure, in that short-term debt and quality audit are two alternative mechanisms used to mitigate information asymmetry and monitor managerial behavior. Therefore, in firms audited by high-quality audit firms, due to the effective monitoring imposed by auditors on debt convent, creditors experience information asymmetry and less agency costs, thereby desiring to extend the debt maturity. The findings of current study not only fill existing gaps in the field, but also contribute to decision-making practices in stock exchange.

Article
PeerReviewed

ISSN 1986-8499 (In Press)

International Burch University

2017

3718