Loan Guarantees, Corporate Social Responsibility Disclosure and Audit Fees: Evidence from China

Fangjun Wang (), Luying Xu (), Fei Guo () and Junrui Zhang ()
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Fangjun Wang: Xi’an Jiaotong University
Luying Xu: Xi’an Jiaotong University
Fei Guo: North China University of Water Resources and Electric Power
Junrui Zhang: Xi’an Jiaotong University

Journal of Business Ethics, 2020, vol. 166, issue 2, No 6, 293-309

Abstract: Abstract This paper examines the relationship between loan guarantees and audit fees as well as the moderating effect of corporate social responsibility (CSR). We find that guaranteeing another entity’s debt significantly increases firms’ own audit fees. However, the disclosure of CSR information attenuates the fee-increasing effects of loan guarantees. A closer examination reveals that the role of CSR is attributable to the information effect rather than the signal effect. Our results are robust to the use of a quasi-natural experiment, a propensity score matching analysis, a Heckman two-stage treatment effect model and alternative proxies. This work makes new contributions to the current understanding of the consequences of loan guarantees, determinants of audit fees and value of CSR disclosure.

Keywords: Loan guarantee; Corporate social responsibility; Audit pricing (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10551-019-04135-6

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