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Are modified audit opinions related to the availability of credit?: evidence from finnish SMEs
Aalto University.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2012 (English)In: The European Accounting Review, ISSN 0963-8180, E-ISSN 1468-4497, Vol. 21, no 4, 767-796 p.Article in journal (Refereed) Published
Abstract [en]

We study the association between credit availability and modified audit opinions using a sample of more than 50,000 observations for small- and medium-sized companies. Studies in finance suggest that companies use trade-credit as a source of financing when institutional debt is not available (e.g. Petersen and Rajan, 1994; Danielsson and Scott, 2004). Building on these studies, we study whether modified audit opinions are associated with an increased use of trade credit relative to bank debt. We find no association between modified audit opinions and our measure of credit rationing. Our archival evidence focusing on SMEs is contrary to much of the earlier research finding that modified audit opinions provide incremental information for lenders. Our study adds to the scarce literature on the role of audit reports as a source of information in SME finance.

Place, publisher, year, edition, pages
London, 2012. Vol. 21, no 4, 767-796 p.
National Category
Business Administration
Research subject
Business Studies
URN: urn:nbn:se:umu:diva-57790DOI: 10.1080/09638180.2012.671465ISI: 000310591200004OAI: diva2:544771
Available from: 2012-08-16 Created: 2012-08-16 Last updated: 2012-12-04Bibliographically approved

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