| Summary: | 碩士 === 東吳大學 === 會計學系 === 104 === Because of the information asymmetry between investors and firms, investors will demand higher return for bearing higher information risk, the return is called the cost of equity capital. However, auditor tenure may have an impact on audit quality, thereby affecting information risk, which will affect the cost of equity capital.
This study investigates the relationship between audit firm tenure and the cost of equity capital. Besides, the paper examines the association between the first auditor partner tenure, the second auditor partner tenure and the cost of equity capital under the unique dual-attestation system in Taiwan.
The empirical result indicates that audit firm tenure and the second auditor partner tenure are both negatively associated with the cost of equity capital. In other words, the cost of equity capital decreases with tenure. However, we do not find any significant association between the first auditor tenure and the cost of equity capital.
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