Status : Verified
| Personal Name | Borja, Daniel Vincent H. |
|---|---|
| Resource Title | Effect of audit quality on the cost of equity capital of selected listed firms in the Philippines |
| Date Issued | April 2013 |
| Abstract | This study examines the empirical evidence about the effects of audit quality on the equity costs of capital of local companies listed in the Philippine Stock Exchange. The study aims to determine if audit opinions provided by independent auditors influence the equity cost of capital of Philippine listed firms. Will an opinion other than unqualified impact the required return of shareholders? Also, different dimensions of audit quality are explored and evaluated if each dimension affects the equity cost of capital of the listed firms included in the study. The audit quality dimensions that were analysed include auditor choice using audit firm size and audit firm switches as proxies, auditor tenure using audit firm tenure and engagement partner rotation as proxies, audit effort and auditor independence. Focusing on listed companies from the Property, Financial nstitutions and Energy & Utilities sectors, a sample of 308 firm-year observations from the period 2004-2011 were included in the study. Using Pooled Ordinary Least Squares and including Company Growth Opportunities, Leverage and Company Size as control variables, various regression models were developed to test the various hypotheses. The results show that proxies for the size of the audit firm and tenure of the firm as auditor are statistically significant. The proxies for the other audit quality dimensions such as audit opinion, partner rotation, auditor independence, audit effort and change in auditors are statistically insignificant. Auditor independence may still be significant given that this is related to audit firm size. The results of the study may indicate that Auditor Competence is assessed and consequently measured by the stakeholders, stockholders in particular, in their valuation of information risk. Thus, the audit quality variables, Audit Firm Size and Audit Firm Tenure, identified by this study as significant act as signals to the stockholders, or other stakeholders, of the level of credibility of the financial statements that they depend on in making sound economic decisions. |
| Degree Course | Doctor of Philosophy in Business Administration |
| Language | English |
| Keyword | Audited financial statements; Auditing; Corporations |
| Material Type | Thesis/Dissertation |
Preliminary Pages
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