Reprint of: Third-party auditor liability risk and trade credit policies

Kyiu, A ORCID: https://orcid.org/0000-0003-0410-8193, Tawiah, B, Boasiako, KA ORCID: https://orcid.org/0000-0002-9078-9396 and Adasi Manu, S ORCID: https://orcid.org/0000-0001-9318-9620 (2025) Reprint of: Third-party auditor liability risk and trade credit policies. British Accounting Review, 57 (1). 101562. ISSN 0890-8389

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Official URL: https://doi.org/10.1016/j.bar.2025.101562

Abstract

We investigate the effect of Third-Party Auditor Liability (TPAL) risk on firms' trade credit policies. Exploiting the staggered state-level changes to TPAL in the US as a quasi-natural experiment, we find that firms in states with a higher risk of TPAL increase their use of trade credit. This relationship is more pronounced for firms with a more enhanced information environment, those with greater financial constraints, and those whose auditors are more exposed to litigation risk. Overall, our findings provide evidence of how TPAL affects firms’ short-term financing needs.

Item Type:	Article (Article)
Peer-reviewed:	Yes
Date Deposited:	17 Apr 2025 08:09
Publisher:	Elsevier BV
Additional Information:	This is an open access article which appeared in British Accounting Review, published by Elsevier. This is a reprint of a previous publication withdrawn as it as prematurely published.
Divisions:	Faculties > Business and Law Faculties > Business and Law > Finance and Economics
Subject terms:	1501 Accounting, Auditing and Accountability, Accounting, 3501 Accounting, auditing and accountability, 3502 Banking, finance and investment
Data Access Statement:	Data will be made available on request.
URI:	https://e-space.mmu.ac.uk/id/eprint/639538
DOI:	https://doi.org/10.1016/j.bar.2025.101562
ISSN	0890-8389
e-ISSN	1095-8347

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