The Accounting Review Vol. 85 No. 3 2010
Short-Term Debt Maturity Structures, Credit Ratings, and the Pricing of Audit Services
Abstract
Short-term debt and credit ratings have benefits for financial reporting quality that may be associated with lower audit fees. Using U.S. data for 2003 through 2006, we find that short-term debt is negatively related to audit fees for firms rated by Standard & Poor’s, consistent with more monitoring and better governance mechanisms in firms with higher short-term debt. Credit ratings quality is negatively related to audit fees, consistent with ratings quality reflecting a firm’s liquidity risk, governance mechanisms, and monitoring from rating agencies. We also find that the negative relation between short-term debt and audit fees is stronger for firms with low-quality credit ratings, consistent with auditors pricing lender monitoring.
- DOI
- 10.2308/accr.2010.85.3.877
- Volume
- 85
- Issue
- 3
- Pages
- 877-909
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex