[{"author":[{"first_name":"Riste","full_name":"Ichev, Riste","last_name":"Ichev"},{"first_name":"Jernej","last_name":"Koren","full_name":"Koren, Jernej"},{"last_name":"Kosi","id":"54068","full_name":"Kosi, Urska","first_name":"Urska"},{"first_name":"Katarina","last_name":"Sitar Sustar","full_name":"Sitar Sustar, Katarina"},{"first_name":"Aljosa","full_name":"Valentincic, Aljosa","last_name":"Valentincic"}],"date_created":"2023-01-17T15:03:08Z","date_updated":"2023-01-18T13:40:40Z","main_file_link":[{"url":"https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3853927"}],"title":"Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk","citation":{"ama":"Ichev R, Koren J, Kosi U, Sitar Sustar K, Valentincic A. <i>Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk</i>.; 2021.","ieee":"R. Ichev, J. Koren, U. Kosi, K. Sitar Sustar, and A. Valentincic, <i>Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk</i>. 2021.","chicago":"Ichev, Riste, Jernej Koren, Urska Kosi, Katarina Sitar Sustar, and Aljosa Valentincic. <i>Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk</i>, 2021.","apa":"Ichev, R., Koren, J., Kosi, U., Sitar Sustar, K., &#38; Valentincic, A. (2021). <i>Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk</i>.","bibtex":"@book{Ichev_Koren_Kosi_Sitar Sustar_Valentincic_2021, title={Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk}, author={Ichev, Riste and Koren, Jernej and Kosi, Urska and Sitar Sustar, Katarina and Valentincic, Aljosa}, year={2021} }","mla":"Ichev, Riste, et al. <i>Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk</i>. 2021.","short":"R. Ichev, J. Koren, U. Kosi, K. Sitar Sustar, A. Valentincic, Cost of Debt for Private Firms Revisited: Voluntary Audits as a Reflection of Risk, 2021."},"year":"2021","department":[{"_id":"635"},{"_id":"186"},{"_id":"551"}],"user_id":"88603","_id":"37136","language":[{"iso":"eng"}],"keyword":["private firms","voluntary audit","cost of debt","self‐selection bias","risk"],"type":"working_paper","status":"public","abstract":[{"lang":"eng","text":"This study examines the relation between voluntary audit and the cost of debt in private firms. We use a sample of 4,058 small private firms operating in the period 2006‐2017 that are not subject to mandatory audits. Firms decide for a voluntary audit of financial statements either because the economic setting in which they operate effectively forces them to do so (e.g., ownership complexity, export‐oriented supply chain, subsidiary status) or because firm fundamentals and/or financial reporting practices limit their access to financial debt, both reflected in earnings quality. We use these factors to model the decision for voluntary audit. In the outcome analyses, we find robust evidence that voluntary audits are associated with higher, rather than lower, interest rate by up to 3.0 percentage points. This effect is present regardless of the perceived audit quality (Big‐4 vs. non‐Big‐4), but is stronger for non‐Big‐4 audits where auditees have a stronger position relative to auditors. Audited firms’ earnings are less informative about future operating performance relative to unaudited counterparts. We conclude that voluntary audits facilitate access to financial debt for firms with higher risk that may otherwise have no access to this form of financing. The price paid is reflected in higher interest rates charged to firms with voluntary audits – firms with higher information and/or fundamental risk."}]},{"status":"public","type":"journal_article","_id":"3542","user_id":"54068","department":[{"_id":"551"},{"_id":"635"},{"_id":"186"}],"jel":["M41","C23","L21","P20"],"citation":{"apa":"Valentincic, A., Novak, A., &#38; Kosi, U. (2017). Accounting quality in private firms during the transition towards international standards. <i>Accounting in Europe</i>, <i>14</i>(3), 358–387. <a href=\"https://doi.org/10.1080/17449480.2017.1378821\">https://doi.org/10.1080/17449480.2017.1378821</a>","mla":"Valentincic, Aljosa, et al. “Accounting Quality in Private Firms during the Transition towards International Standards.” <i>Accounting in Europe</i>, vol. 14, no. 3, 2017, pp. 358–87, doi:<a href=\"https://doi.org/10.1080/17449480.2017.1378821\">10.1080/17449480.2017.1378821</a>.","short":"A. Valentincic, A. Novak, U. Kosi, Accounting in Europe 14 (2017) 358–387.","bibtex":"@article{Valentincic_Novak_Kosi_2017, title={Accounting quality in private firms during the transition towards international standards}, volume={14}, DOI={<a href=\"https://doi.org/10.1080/17449480.2017.1378821\">10.1080/17449480.2017.1378821</a>}, number={3}, journal={Accounting in Europe}, author={Valentincic, Aljosa and Novak, Ales and Kosi, Urska}, year={2017}, pages={358–387} }","ama":"Valentincic A, Novak A, Kosi U. Accounting quality in private firms during the transition towards international standards. <i>Accounting in Europe</i>. 2017;14(3):358-387. doi:<a href=\"https://doi.org/10.1080/17449480.2017.1378821\">10.1080/17449480.2017.1378821</a>","ieee":"A. Valentincic, A. Novak, and U. Kosi, “Accounting quality in private firms during the transition towards international standards,” <i>Accounting in Europe</i>, vol. 14, no. 3, pp. 358–387, 2017, doi: <a href=\"https://doi.org/10.1080/17449480.2017.1378821\">10.1080/17449480.2017.1378821</a>.","chicago":"Valentincic, Aljosa, Ales Novak, and Urska Kosi. “Accounting Quality in Private Firms during the Transition towards International Standards.” <i>Accounting in Europe</i> 14, no. 3 (2017): 358–87. <a href=\"https://doi.org/10.1080/17449480.2017.1378821\">https://doi.org/10.1080/17449480.2017.1378821</a>."},"intvolume":"        14","page":"358-387","publication_status":"published","doi":"10.1080/17449480.2017.1378821","date_updated":"2023-01-24T15:34:31Z","author":[{"first_name":"Aljosa","full_name":"Valentincic, Aljosa","last_name":"Valentincic"},{"full_name":"Novak, Ales","last_name":"Novak","first_name":"Ales"},{"last_name":"Kosi","full_name":"Kosi, Urska","id":"54068","first_name":"Urska"}],"volume":14,"abstract":[{"lang":"eng","text":"We study the historical development of Slovenian Accounting Standards (SAS) and their association with accounting quality (AQ). We focus on private firms where the financial reporting process is characterised by low demand for high-quality reporting. We investigate three distinct editions of SAS since 1994 and test how their development towards international standards is related to AQ. Aggregate earnings management measures indicate that the use of accounting discretion decreases with less earnings smoothing over time. The main features of AQ have been consistent throughout historical development. Asymmetric timeliness of earnings, the ability of earnings to predict future cash flows, and the ability of accruals to mitigate mismatching are all present throughout. We also document typical departures from properties of high AQ. For example, accruals do not (always) facilitate timely recognition of losses. However, these can be attributed to the overwhelming influence of reporting incentives (e.g. taxation, debt, size) rather than to the (lower) quality of accounting standards.\r\n\r\n\r\n     \r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n \r\n\r\n\r\n\r\n Full Article  \r\n  Figures & data  \r\n References \r\n  Citations  \r\n \r\n Metrics \r\n  Reprints & Permissions \r\n  PDF \r\n \r\n \r\n\r\n\r\n\r\n\r\nAbstract\r\n\r\n\r\nWe study the historical development of Slovenian Accounting Standards (SAS) and their association with accounting quality (AQ). We focus on private firms where the financial reporting process is characterised by low demand for high-quality reporting. We investigate three distinct editions of SAS since 1994 and test how their development towards international standards is related to AQ. Aggregate earnings management measures indicate that the use of accounting discretion decreases with less earnings smoothing over time. The main features of AQ have been consistent throughout historical development. Asymmetric timeliness of earnings, the ability of earnings to predict future cash flows, and the ability of accruals to mitigate mismatching are all present throughout. We also document typical departures from properties of high AQ. For example, accruals do not (always) facilitate timely recognition of losses. However, these can be attributed to the overwhelming influence of reporting incentives (e.g. taxation, debt, size) rather than to the (lower) quality of accounting standards."}],"publication":"Accounting in Europe","keyword":["private firms","accounting quality","development of accounting standards","IFRS-like standards","Slovenia"],"language":[{"iso":"eng"}],"year":"2017","issue":"3","title":"Accounting quality in private firms during the transition towards international standards","date_created":"2018-07-11T08:57:03Z"},{"extern":"1","language":[{"iso":"eng"}],"keyword":["private firms","voluntary audit","cost of debt","self-selection bias","lemon problem"],"user_id":"88603","department":[{"_id":"635"},{"_id":"186"},{"_id":"551"}],"_id":"37109","status":"public","abstract":[{"lang":"eng","text":"This study examines the effect of audit on private firms’ cost of debt. We use a sample of 1,949 small private firms operating in the period 2006-2010 with optional financial statement audit. High quality data allows us to construct a more precise interest rate measure than existing studies employ. After controlling for obvious sources of demand for voluntary audits (ownership complexity, subsidiary status, bank relations), we find a robust central result that voluntary audits increase rather than decrease the cost of debt financing, contrary to several existing studies. This finding indicates that voluntary audits are generally treated as “adopting a label” and penalised by creditors, regardless of the perceived auditor quality as a result of the lemon problem in the audit market. Even Big-4 audits increase the cost of debt, likely as a result due to the lemon problem in the audit market, although the increase is smaller than for non-Big-4 audits. The results are sensitive to the estimation method used (OLS, Heckman’s two-step, PSM) and (sub-)sample selection. We show that disregarding the underlying assumptions of these estimation methods may lead to incorrect inferences. Additional analyses show that audited firms’ reported earnings are less informative about future operating performance than earnings of their unaudited counterparts. Our results also indicate that results are sensitive to cost of debt definition and this might have affected the results reported in the existing literature."}],"type":"conference","main_file_link":[{"url":"https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2373987"}],"conference":{"start_date":"2013-05-02","name":"36th Annual Congress of European Accounting Association","location":"Paris, France","end_date":"2013-05-05"},"title":"Does Financial Statement Audit Reduce the Cost of Debt of Private Firms?","author":[{"id":"54068","full_name":"Kosi, Urska","last_name":"Kosi","first_name":"Urska"},{"full_name":"Koren, Jerney","last_name":"Koren","first_name":"Jerney"},{"first_name":"Aljosa","full_name":"Valentincic, Aljosa","last_name":"Valentincic"}],"date_created":"2023-01-17T13:25:30Z","date_updated":"2023-01-17T13:51:24Z","citation":{"ama":"Kosi U, Koren J, Valentincic A. Does Financial Statement Audit Reduce the Cost of Debt of Private Firms? In: ; 2013.","chicago":"Kosi, Urska, Jerney Koren, and Aljosa Valentincic. “Does Financial Statement Audit Reduce the Cost of Debt of Private Firms?,” 2013.","ieee":"U. Kosi, J. Koren, and A. Valentincic, “Does Financial Statement Audit Reduce the Cost of Debt of Private Firms?,” presented at the 36th Annual Congress of European Accounting Association, Paris, France, 2013.","mla":"Kosi, Urska, et al. <i>Does Financial Statement Audit Reduce the Cost of Debt of Private Firms?</i> 2013.","short":"U. Kosi, J. Koren, A. Valentincic, in: 2013.","bibtex":"@inproceedings{Kosi_Koren_Valentincic_2013, title={Does Financial Statement Audit Reduce the Cost of Debt of Private Firms?}, author={Kosi, Urska and Koren, Jerney and Valentincic, Aljosa}, year={2013} }","apa":"Kosi, U., Koren, J., &#38; Valentincic, A. (2013). <i>Does Financial Statement Audit Reduce the Cost of Debt of Private Firms?</i> 36th Annual Congress of European Accounting Association, Paris, France."},"year":"2013"}]