... for firms with less precise private information. Path analysis shows that the association between high-quality auditor presence and learning firms’ investment inefficiency is explained via a direct path of source credibility and an indirect path mediated by peer firms’ accounting information quality...

...Adam Greiner; Lorenzo Patelli; Matteo Pedrini SUMMARY We examine the relationship between audit pricing and managerial tone as a proxy of source credibility. Prior research shows that source credibility influences auditors' perceptions of client risk. Textually analyzing annual letters...