skip to main content
Language:
Search Limited to: Search Limited to: Resource type Show Results with: Show Results with: Search type Index

Corporate Debt Financing and Earnings Quality

Journal of business finance & accounting, 2010-06, Vol.37 (5-6), p.538-559 [Peer Reviewed Journal]

2010 Blackwell Publishing Ltd ;Copyright Blackwell Publishing Ltd. Jun/Jul 2010 ;ISSN: 0306-686X ;EISSN: 1468-5957 ;DOI: 10.1111/j.1468-5957.2010.02194.x

Full text available

Citations Cited by
  • Title:
    Corporate Debt Financing and Earnings Quality
  • Author: Ghosh, Aloke (Al) ; Moon, Doocheol
  • Subjects: Accounting methods ; Accruals ; accruals quality ; Borrowing ; Corporate debt ; Correlation analysis ; Debt financing ; Debt management ; Earnings ; Earnings management ; earnings quality ; Financial accounting ; Managers ; Studies
  • Is Part Of: Journal of business finance & accounting, 2010-06, Vol.37 (5-6), p.538-559
  • Description: :  Our study establishes linkages between two extensively researched areas, debt financing and the quality of earnings. Debt can have a ‘positive influence’on earnings quality because managers are likely to use their accounting discretion to provide private information about the firms’ future prospects to lower financing costs. For high debt, it can also have a ‘negative influence’ on earnings quality as managers use accruals aggressively to manage earnings to avoid covenant violations. Using accruals quality as a proxy for earnings quality, we document a non‐monotonic (curvilinear) relation between debt and earnings quality. The relationship is positive at low levels of debt and negative at high debt levels with an inflection point around 41%. Our results suggest that firms that rely heavily on debt financing might be willing to bear higher costs of borrowing from lower earnings quality because the benefits from avoiding potential debt covenant violations exceed the higher borrowing costs.
  • Publisher: Oxford, UK: Blackwell Publishing Ltd
  • Language: English
  • Identifier: ISSN: 0306-686X
    EISSN: 1468-5957
    DOI: 10.1111/j.1468-5957.2010.02194.x
  • Source: Alma/SFX Local Collection
    RePEc
Back to results list
INSPIRE LIBRARY - TON DUC THANG UNIVERSITY (84-028) 37 755 057 Feedback
19 Nguyen Huu Tho St. Dist.7, HCM thuvien@tdtu.edu.vn

Copyright © 2017 INSPIRE LIBRARY - TON DUC THANG UNIVERSITY

Searching Remote Databases, Please Wait