We examine whether stock market-listed firms in the U.S. invest suboptimally due to agency costs resulting from separation of ownership and control. We derive testable predictions to distinguish between underinvestment due to rational “short-termism” and overinvestment due to “empire...

Previous research has set a firm position on quality and credibility of accounting information in the audit markets. Firth and Smith (1992), Firth and Liau-Tan (1998) and DeFranco et al. (2010) observed that brand name auditors provide higher assurance and credibility to the audited financial...

Purpose The purpose of this paper is to test the relationship between earnings quality and the cost of debt for private companies in a “code-law” country (Ball et al. , 2000). The analysis controls for company size, debt level and audited information. Design/methodology/approach The paper...