The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small-Cap Companies

CHAPTER 15AUDIT FIRMS: WHY IT PAYS TO THINK LIKE AN INSTITUTIONAL INVESTOR

The Good Stock “X” Factor

Key considerations for directors:

• Institutional investors, unlike most retail investors, place great emphasis on the integrity of financial statements.

• From an institutional investor perspective, an audit firm’s reputation is critical.

• Not every audit firm is affordable for small-cap companies, nor is every audit firm interested in small-cap business.

• When evaluating candidate audit firms, small-cap companies should utilize the same assessment tools used by institutional investors.

• Ultimately, cost of capital and access to capital can be greatly affected by a small-cap company’s audit firm.

Common mistakes to avoid:

• Underestimating ...