Theory suggests that information asymmetry between supplier and customer firms exacerbates the holdup problem. We investigate if an auditor common to the supplier and customer firm improves information flows leading to reduction in the holdup problem. Consistent with this notion, we find that...

We show that firms located in states where property crime is more prevalent have more uncertain earnings and higher financing costs. Specifically, firms located in states with higher property crime rates have more volatile and less persistent earnings as well as lower quality analysts' earnings...

Using a sample of key supplier-customer relationships, we investigate whether an auditor common to a supplier and customer firm reduces information asymmetry between the two parties, leading to an increase in relationship-specific investments. We find evidence that the presence of a common...

We examine whether it is incentives or standards that determine firms' financial reporting quality using a natural experiment in Taiwan. Before 2001, Taiwan's Company Act required private firms with capital levels exceeding a certain threshold to file and publish audited financial statements....