External Monitoring of Property Appraisal Estimates and Information Asymmetry
利用英国投资物业公司数据，发现使用外部评估师的公司信息不对称程度更低，从而降低资本成本，而审计师类型无此效果。
Finance theory proposes that firms’ cost of capital increases when market makers set wider spreads due to perceived higher information asymmetry across traders. Using a sample of UK investment property firms and controlling for firms’ non‐random selection of external monitors, we find evidence that market makers perceive information asymmetry across traders to be lower for firms employing external appraisers versus those employing internal appraisers. This evidence is consistent with liquidity‐motivated traders being unable to overcome such reliability differences using asset value information from sources other than accounting. We fail to find a similar difference for firms employing Big 6 versus non‐Big 6 auditors. Our findings contribute to the debate over the recognition of fair value estimates for long‐lived tangible assets by documenting that reliability differences attributable to differential monitoring by appraisers can affect information asymmetry, and therefore firms’ cost of capital.