Cost of capital and the double moderating effects of firm age and audit lag: evidence from Thailand’s MAI market

Abstract This study examines how audit-related characteristics influence firms’ financing costs within an emerging market context. Specifically, the study investigates the effects of audit opinion, auditor type, audit lag, and financial indicators on the weighted average cost of capital (WACC), alongside its components—the cost of equity and the cost of debt. Extending prior research, the study incorporates the double moderating roles of firm age and audit lag, recognizing that the effectiveness of audit-related signals may depend on organizational maturity and reporting timeliness. The empirical analysis is based on 1143 firm-year observations from 127 firms listed on Thailand’s Market for Alternative Investment (MAI) over the period 2016–2024. The analysis employs fixed-effects panel regressions with robust standard errors. The results indicate that audit opinions emerge as the most consistent determinant of financing costs. Firms receiving clean audit opinions exhibit significantly lower WACC, cost of equity, and cost of debt, underscoring the role of audit conclusions as credibility-enhancing signals. Audit lag is positively associated with financing costs, indicating that reporting timeliness conveys risk-relevant information. The findings also reveal important asymmetries. Profitability primarily affects equity pricing, while liquidity exhibits a positive association with WACC and the cost of equity, consistent with agency-based interpretations of excess liquidity. The moderating analyses demonstrate that audit-related characteristics exert stronger effects among younger firms, while shorter audit lag strengthens the favorable impact of audit signals on WACC. Overall, this study extends the audit–cost of capital literature by demonstrating that audit-related signals operate not only directly but also conditionally, depending on firm maturity and reporting timeliness in emerging markets.