search query: @author Tsui, J. S. L. / total: 4
reference: 3 / 4
| Author: | Gul, F. A. Tsui, J. S. L. |
| Title: | A test of the free cash flow and debt monitoring hypotheses: Evidence from audit pricing |
| Journal: | Journal of Accounting & Economics
1997 : DEC, VOL. 24:2, p. 219-237 |
| Index terms: | CASH FLOW DEBT GROWTH AUDITING PRICING COMPANIES |
| Language: | eng |
| Abstract: | The study examines the association btw. free cash flow (or FCF) and audit fees. The association is expected, given Jensen's argument that managers of low growth / high growth FCF firms engage in non-value-maximizing activities. These activities increase auditors' assessments of inherent risk and, in turn, audit fees and effort. Jensen also argues that debt mitigates the non-value-maximizing activities. Thus, the positive FCF / audit fees association is expected to be weaker for low growth firms with high debt than for similar firms with low debt. Regression results for a sample of low growth Hong Kong firms support these hypotheses. |
SCIMA