Date of Award
8-3-2017
Degree Type
Thesis
Degree Name
Master of Philosophy (MPHIL)
Department
Accountancy
First Advisor
Prof. Agnes LO Wai Yee
Second Advisor
Prof. CHAN Koon Hung
Abstract
The role of independent auditors is to ensure the accuracy and the credibility of the financial statements. Independent auditors help in reducing agency costs and serve as a monitoring function for creditors. A change in an auditor–client relationship may provide useful information to creditors. Creditors may consider the signal of auditor changes, which affects information risks, as a factor in determining the terms of debts. After several major audit scandals, awareness of the importance of audit quality has increased. Audit partner changes and audit firm changes have been implemented in some jurisdictions to enhance the audit quality. Since China requires disclosure by signing partners’ names on audit reports, audit partner rotations can be identified. The direction of audit firm changes can be downward, lateral, and upward audit firm changes. In this thesis, the effects on debt financing of auditor changes at both audit firm and audit partner levels in different directions are comprehensively investigated. This thesis addresses the importance of understanding the association between audit firm/ partner changes and debt financing. I find that, overall, auditor changes worsen debt financing in various situations. The findings of this thesis should have important implications for investors, corporate financial managers, and regulators.
Copyright
The copyright of this thesis is owned by its author. Any reproduction, adaptation, distribution or dissemination of this thesis without express authorization is strictly prohibited.
Recommended Citation
Chan, S. Y. (2017). Auditor changes and debt financing: Evidence from China (Master's thesis, Lingnan University, Hong Kong). Retrieved from http://commons.ln.edu.hk/acct_etd/23/