Abstract
The aim of this paper is to test whether the pricing of accruals depends on auditor reputation. Using a wide sample made up of Spanish privately held firms for the period 1996-2002, we show that the inverse correlation between accruals quality and cost of debt reported by Francis et al. (2005) only holds when the auditor belongs to a Big 4 firm. When the auditors are national majors or local audit firms, an increase of accruals quality does not lead to a significant decrease in the cost of debt.
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