This study examines relation of the auditor choice and cost of debt financing for private SMEs (small and medium sized enterprises). In particular, it examines whether choice of a certified auditor or reputable international audit firm provides economic value to private SMEs as a factor lowering firms’information problems and cost of debt financing in the capital markets. Using timeseries crosssectional data of 832 Finnish private and limited SMEs, results indicate that the choice of an international brand name audit firm is negatively related to estimated cost of debt finance for SMEs. Results are shown to be robust to effects of relevant firmspecific characteristics, and to possible selfselection bias related to firm’s auditor choice. The reported relation between the choice of a certified auditor and cost of debt financing is negative as expected, but lacks statistical significance. 1
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