Evidence is mixed regarding the economic benefits achieved by companies hiring large firms to audit their financial statements. The studies approaching this theme concentrate mostly on public companies in developed markets, while the effect on private firms in emerging markets is still an open question. This research explores this gap by analyzing whether private firms in the Brazilian sugarcane industry audited by a Big 4 have a lower cost of debt than those audited by a non-Big 4. For that, a unique, hand-collected, dataset was used. This paper contributes to the literature by providing evidence of the role of audit institutions in an environment lacking studies on private firms’ financial reports, especially in emerging economies. The empirical analysis does not indicate that the cost of debt is negatively influenced by the verification of financial statements by a high-quality auditor. Banks and credit unions, as the primary funding sources of the industry, condition the cost of debt reduction to the levels of tangibility, leverage, and profitability. We also contribute to the literature by demonstrating that lenders may have other soft information sources, obtained through banking relationship, which may substitute higher-quality auditor. The results hold after robustness checks and endogeneity concerns.

中文翻译：

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私营企业的审计质量和债务成本：来自巴西甘蔗业的证据

关于公司聘请大公司审计其财务报表所取得的经济利益，证据不一。接近这一主题的研究主要集中在发达市场的上市公司，而对新兴市场私营公司的影响仍然是一个悬而未决的问题。本研究通过分析由四大公司审计的巴西甘蔗行业私营公司的债务成本是否低于非四大公司审计的私营公司来探索这一差距。为此，使用了一个独特的、手工收集的数据集。本文通过提供证据证明审计机构在缺乏对私营公司财务报告研究的环境中的作用，特别是在新兴经济体中，为文献做出了贡献。实证分析并未表明债务成本受到高质量审计师对财务报表的核查的负面影响。银行和信用合作社作为该行业的主要资金来源，将债务削减成本限制在有形性、杠杆率和盈利能力的水平上。我们还通过证明贷款人可能有其他软信息来源，通过银行关系获得，可以替代更高质量的审计师，从而为文献做出贡献。结果在稳健性检查和内生性问题之后成立。我们还通过证明贷款人可能有其他软信息来源，通过银行关系获得，可以替代更高质量的审计师，从而为文献做出贡献。结果在稳健性检查和内生性问题之后成立。我们还通过证明贷款人可能有其他软信息来源，通过银行关系获得，可以替代更高质量的审计师，从而为文献做出贡献。结果在稳健性检查和内生性问题之后成立。