Table 3 - uploaded by Asif Huq
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The purpose of this study is to investigate if audited financial statements add value for firms in the private debt market. Using an instrumental variable method, we find that firms with audited financial statements, on average, save 0.47 percentage points on the cost of debt compared to firms with unaudited financial statements. We also find that...
Contexts in source publication
Context 1
... 2012, 9.7% of the unaudited firms had negative equity, while 3% of the audited firms had negative equity. Table 2 presents descriptive statistics and variable descriptions for all variables in the analysis, while Table 3 reports descriptive statistics of the two sub-groups: audited and unaudited firms. 12 The descriptive statistics are quite similar to those reported in Yazdanfar & Öhman (2015) and Öhman & Yazdanfar (2017), who also use Swedish data, but over the period 2009-2012. ...
Context 2
... from the estimation of equation (1), using Reform2010 as an instrument for Audited, are presented in Table 5. Due to missing observations in one or more variables the number of firms is reduced from 123 774 to 113 020 in the main regression. The first stage estimation results of our 2SLS procedure are presented in Table A3 in Appendix C. Since heteroscedasticity-consistent standard errors are used in the estimations, Wooldridge's (1995) robust score test is used to test if Audited can be considered exogenous, and the results show that exogeneity can be rejected at the 1 percent significance level. The first stage F-statistics of the endogenous regressor are also reported; for one endogenous regressor, if the F statistic exceeds 10 then the inference is reliable and the instrument is not weak (Stock & Yogo, 2005), which is clearly the case in our estimations. ...
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Citations
Many European countries have abolished mandatory audits for small firms to reduce the regulatory and administrative burden for these firms. However, we still lack knowledge on whether such legislative changes affect employment growth for those firms that become free to choose to have external audits. We investigate this question using a Swedish reform that made audits voluntary for small firms fulfilling certain requirements. The reform created an almost ideal natural experiment, which we use to evaluate the effects of voluntary audits on employment growth for small firms using a difference-in-difference estimator. We find that firms which fulfilled the requirements for voluntary auditing, compared to a control group of similar firms that did not, increased their employment growth rate by 0.59%. This corresponds to 2,770 jobs being created in the year following the reform, suggesting that mandatory audits act as a growth barrier for small firms.
