Multiple audit mechanism, audit quality and cost of debt: Empirical evidence from a developing country

摘要: Purpose: This study focuses on the distinctive Egyptian setting, where firms could use multiple audit mechanism voluntarily or mandatory under certain circumstances. We investigate effects quality and cost of debt. Design/methodology/approach: A sample 1699 firm-year observations listed for 2009-2019 period is used. Abnormal accruals are employed as proxies through abnormal working capital modified-Jones models. The regression method used to estimate research model after controlling firm ownership specific factors that hypothetically influence levels both debt. Findings: Results suggest joint audits not associated with quality. In contrast, dual positively leading conclude providing a high level But this result holds only in companies income decreasing discretionary accruals. These results line litigation reputational risk fears offering motivations auditors favour conservative accounting alternatives (i.e., accruals). implies opting employ have higher earnings conservatism. Our evidence also indicates choice mechanisms especially related significant increases debt, implying perceived risk. Further, decrease debt management. Originality/value: adds literature whether preference income-increasing consequently affected Together, our support view voluntary Egypt compared audits, which affect pricing important implications policymakers, investors. .