英文摘要 |
The purpose of this study is to examine the relationship between audit quality and information asymmetry. Audit quality, the proxy variable representing information asymmetry widely in most studies, can affect firms' cost of capital. To differentiate from prior studies relating audit quality as the proxy variable, our study adopts probability of information-base trading (also named as PIN). PIN utilizes the possibility of informed traders trading stocks in capital market, as direct variable to evaluate the level of firm's information asymmetry. In addition, the size of audit firms, audit tenure, the discretionary accruals and the experts in audit market are also designed as proxy variables of audit quality. Based on empirical results, we prove that audit quality can significantly reduce information asymmetry. This study not only complements the linkages between audit quality and information asymmetry that prior studies didn't provide, but it also proves this with large audit firms in Taiwan, implying capability of higher audit quality, can effectively reduce information asymmetry. |