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Common Auditors and Credit Costs in Times of Crisis: Evidence From the COVID‐19 Pandemic

Author

Listed:
  • Iftekhar Hasan

    (Fordham University [New York])

  • Joon Ho Kong

    (Stevens Institute of Technology [Hoboken])

  • Haekwon Lee

    (The University of Sydney Business School)

  • Panagiotis Politsidis

    (Audencia Business School)

Abstract

ABSTRACT We provide evidence that common auditors among lenders and borrowers mitigate the aggravating effect of COVID‐19 on syndicated loan pricing. Specifically, a common auditor alleviates lenders' COVID‐19 exposure constraints, resulting in a 2.5% decrease in the offered loan spread. This easing effect is magnified by the length of the auditor‐lender tenure; it is concentrated in loans between highly exposed lender–borrower pairs and, notably, further facilitates access to loan financing for auditor‐connected borrowers. Nonetheless, this does not constitute irresponsible lending behavior based on a comparison of ex post loan performance for borrowers with common auditors versus their non‐common‐auditor counterparts. Our results highlight an important yet overlooked function of common auditors: their ability to act as a broker between lenders and borrowers during periods of heightened stress.

Suggested Citation

  • Iftekhar Hasan & Joon Ho Kong & Haekwon Lee & Panagiotis Politsidis, 2026. "Common Auditors and Credit Costs in Times of Crisis: Evidence From the COVID‐19 Pandemic," Post-Print hal-05647006, HAL.
    • Handle: RePEc:hal:journl:hal-05647006
    DOI: 10.1111/jbfa.70074
    as

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