The Accounting Review Vol. 101 No. 1 2026
Common Auditors in Supply Chain Relationships and the Provision of Trade Credit
Abstract
This study examines the association between a shared common auditor among suppliers and customers and trade credit. Using hand-collected pairwise trade credit data, we find that a supplier extends more trade credit to a customer audited by a common auditor. This association is robust to alternative design specifications and various sample restrictions to alleviate selection bias. We then interview trade credit managers and executives as a prelude to archival analyses exploring multiple potential mechanisms to explain this association. The collective results are most consistent with the explanation that mutual third parties to a dyadic relationship can foster trust through social connections and increased salience of reputation effects rather than that a common auditor reduces information asymmetry about the rigor of the audit process. Data Availability: Data are available from the public sources cited in the text.
- DOI
- 10.2308/tar-2022-0142
- Volume
- 101
- Issue
- 1
- Pages
- 411-435
- Language
- en
- Sources
- openalex crossref