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    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Accounting and Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Accounting and Economics, 64, 1, 2017 DOI: 10.1016/j.jacceco.2017.06.001

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Private lenders’ demand for audit

Research output: Contribution to journalJournal article

Published

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Private lenders’ demand for audit. / Baylis, Richard; Burnap, Peter; Clatworthy, Mark; Gad Mahmoud, Mahmoud; Pong, Christopher.

In: Journal of Accounting and Economics, Vol. 64, No. 1, 08.2017, p. 78-97.

Research output: Contribution to journalJournal article

Harvard

Baylis, R, Burnap, P, Clatworthy, M, Gad Mahmoud, M & Pong, C 2017, 'Private lenders’ demand for audit', Journal of Accounting and Economics, vol. 64, no. 1, pp. 78-97. https://doi.org/10.1016/j.jacceco.2017.06.001

APA

Baylis, R., Burnap, P., Clatworthy, M., Gad Mahmoud, M., & Pong, C. (2017). Private lenders’ demand for audit. Journal of Accounting and Economics, 64(1), 78-97. https://doi.org/10.1016/j.jacceco.2017.06.001

Vancouver

Baylis R, Burnap P, Clatworthy M, Gad Mahmoud M, Pong C. Private lenders’ demand for audit. Journal of Accounting and Economics. 2017 Aug;64(1):78-97. https://doi.org/10.1016/j.jacceco.2017.06.001

Author

Baylis, Richard ; Burnap, Peter ; Clatworthy, Mark ; Gad Mahmoud, Mahmoud ; Pong, Christopher. / Private lenders’ demand for audit. In: Journal of Accounting and Economics. 2017 ; Vol. 64, No. 1. pp. 78-97.

Bibtex

@article{89d83472f7cc4305af03d071a286ff33,
title = "Private lenders{\textquoteright} demand for audit",
abstract = "We study clauses in private lending agreements requiring auditors to assure lenders of borrowers{\textquoteright} compliance with financial covenants. Auditors are required under general purpose financial reporting to review covenant compliance. However, by informing lenders directly that they have no knowledge of default, auditors may increase their litigation risk. We find that auditor covenant compliance assurance clauses are significantly associated with more complex contractual adjustments to net income, the extent of reliance on accounting information in the contract, intangibility of borrowers{\textquoteright} assets, the number of lenders and loan maturity. We provide novel evidence of the audit market enhancing efficient contracting.",
keywords = "Auditing, Financial reporting, Debt contracts",
author = "Richard Baylis and Peter Burnap and Mark Clatworthy and {Gad Mahmoud}, Mahmoud and Christopher Pong",
note = "This is the author{\textquoteright}s version of a work that was accepted for publication in Journal of Accounting and Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Accounting and Economics, 64, 1, 2017 DOI: 10.1016/j.jacceco.2017.06.001",
year = "2017",
month = aug,
doi = "10.1016/j.jacceco.2017.06.001",
language = "English",
volume = "64",
pages = "78--97",
journal = "Journal of Accounting and Economics",
issn = "0165-4101",
publisher = "Elsevier",
number = "1",

}

RIS

TY - JOUR

T1 - Private lenders’ demand for audit

AU - Baylis, Richard

AU - Burnap, Peter

AU - Clatworthy, Mark

AU - Gad Mahmoud, Mahmoud

AU - Pong, Christopher

N1 - This is the author’s version of a work that was accepted for publication in Journal of Accounting and Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Accounting and Economics, 64, 1, 2017 DOI: 10.1016/j.jacceco.2017.06.001

PY - 2017/8

Y1 - 2017/8

N2 - We study clauses in private lending agreements requiring auditors to assure lenders of borrowers’ compliance with financial covenants. Auditors are required under general purpose financial reporting to review covenant compliance. However, by informing lenders directly that they have no knowledge of default, auditors may increase their litigation risk. We find that auditor covenant compliance assurance clauses are significantly associated with more complex contractual adjustments to net income, the extent of reliance on accounting information in the contract, intangibility of borrowers’ assets, the number of lenders and loan maturity. We provide novel evidence of the audit market enhancing efficient contracting.

AB - We study clauses in private lending agreements requiring auditors to assure lenders of borrowers’ compliance with financial covenants. Auditors are required under general purpose financial reporting to review covenant compliance. However, by informing lenders directly that they have no knowledge of default, auditors may increase their litigation risk. We find that auditor covenant compliance assurance clauses are significantly associated with more complex contractual adjustments to net income, the extent of reliance on accounting information in the contract, intangibility of borrowers’ assets, the number of lenders and loan maturity. We provide novel evidence of the audit market enhancing efficient contracting.

KW - Auditing

KW - Financial reporting

KW - Debt contracts

U2 - 10.1016/j.jacceco.2017.06.001

DO - 10.1016/j.jacceco.2017.06.001

M3 - Journal article

VL - 64

SP - 78

EP - 97

JO - Journal of Accounting and Economics

JF - Journal of Accounting and Economics

SN - 0165-4101

IS - 1

ER -