Title: Quality of the External Auditor,
Information
Asymmetry and Bid-Ask Spread: Case of the Listed Tunisian Firms
Abstract: This
paper
examines the association between bid-ask spreads, a market based
measure
of information asymmetry, and the quality of the external audit in the
Tunisian
capital market. Our results show that the bid-ask spreads is negatively
related
to the employment of an industry specialist auditor and Big4 auditor;
and
positively related to audit firm tenure. However, further tests refine
those
conclusions, in that the positive association between tenure and
bids-ask
spread differs between specialist and non-specialist auditors and
between
Big4 and non-Big4 auditors. Specifically, we find that bid-ask spreads
is
increasing in tenure for clients of non-specialist and clients of
non-Big4.
These findings are consistent with a market that perceives audit
quality
diminishing with tenure for non-specialist auditors and non-Big4
auditors;
and a market that finds audit quality increasing with industry
specialization
and Big4 auditors.
Authors: Faten
Hakim and
Abdelwahed Omri