Leverage, debt maturity, and social capital

Huang, Kershen; Shang, Chenguang

doi:10.1016/j.jcorpfin.2018.11.001

Cited by 98 publications

(43 citation statements)

References 86 publications

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“…The mean of COMOVE in our sample is 0.145, comparable to that (0.165) in Jackson et al (2017). The mean financial leverage in the sample is 0.310, which is close to 0.2817 reported by Huang and Shang (2019). Panel B of Table 2 partitions the sample based on CEO religiosity.…”

Section: Sample Selection and Descriptive Statisticssupporting

confidence: 63%

CEO religious university affiliation and financial reporting quality

Chu

Park

et al. 2021

Accounting & Finance

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Utilising a novel proxy for CEO religiosity that is based on graduation from a religious university, we document evidence that a CEO's religiosity improves financial reporting quality. This effect is more pronounced when the firm is located in an area with higher geographical religiosity or more social capital, suggesting that a favourable environment facilitates the CEO religiosity effect. We also find that analyst forecasts are more accurate for firms led by a religious CEO, and that fewer analysts follow such firms, consistent with the view that there is less need for analyst service if the firm provides high-quality information. We develop a series of tests to alleviate endogeneity concerns, including a reverse causality test, a difference-in-differences test based on a sample of exogenous CEO turnovers, and a placebo test. Our evidence suggests a causal explanation of the effect of CEO religiosity on financial reporting quality.

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Section: Sample Selection and Descriptive Statisticssupporting

confidence: 63%

CEO religious university affiliation and financial reporting quality

Chu

Park

et al. 2021

Accounting & Finance

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“…They interpret this result as SC, as a governance institution, constraining self-serving corporate practices that benefit shareholders at the expense of other stakeholders. Huang and Shang (2019) present evidence that firm leverage and short-term debt ratios are negatively associated with SC. They argue that high SC alleviates agency conflicts between managers and shareholders, allowing firms to reduce the amount of debt in their capital structure and the usage of short-term debt in their debt structure.…”

Section: B Social Capital and Trustworthinessmentioning

confidence: 71%

Social Capital, Trusting, and Trustworthiness: Evidence from Peer-to-Peer Lending

Lu¹,

Hasan

2021

J. Financ. Quant. Anal.

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How does social capital affect trust? Evidence from a Chinese peer-to-peer lending platform shows that regional social capital affects the trustee’s trustworthiness and the trustor’s trust propensity. Ceteris paribus, borrowers from regions with higher social capital receive larger bids from individual lenders and have higher funding success, larger loan sizes, and lower default rates, especially for low-quality borrowers. Lenders from regions with higher social capital take higher risks and have higher default rates, especially for inexperienced lenders. Cross-regional transactions are most (least) likely to be realized between parties from regions with high (low) social capital.

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“…Prior evidence shows that the firms employ short-term debt to (a) improve the information quality (Berger et al, 2005;Flannery, 1986); (b) enhance managerial monitoring (Diamond and He, 2014) and consequently, attain funds at favorable rates. The maturity structure of the loan in literature is viewed as one of the tools to monitor the activities of the managers (Diamond, 1993;Huang and Shang, 2019). In this research, we also study the moderating role of short-term debt on the nexus between real earnings management and investment inefficiency.…”

Section: Jaee 122mentioning

confidence: 99%

The jinx of real earnings management: evidence from inefficient investments and debt maturity structure in Pakistan

Bhutta

AlHares

Shahab

et al. 2021

JAEE

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PurposeThis study aims to investigate two important research questions. First, this research examines the impact of real earnings management on investment inefficiency of the non-financial listed firms in Pakistan. Second, this research further explores the moderating role of short-term debt on the nexus between real earnings management and investment inefficiency. This study attempts to highlight an important research problem i.e. the jinx of real earnings management from the context of an emerging economy.Design/methodology/approachThis study employs the data from non-financial listed firms in Pakistan over the period from 2008 to 2018. The study uses panel data methodologies with firm and year fixed-effects to examine the proposed hypotheses. The results are robust to the use of sensitivity analysis, different estimation techniques and endogeneity issues (using two-stage least squares (2SLS) and generalized method of moments (GMM) techniques).FindingsThe results of the research are twofold. First, consistent with the theoretical arguments, the findings reveal that real earnings management increases investment inefficiency and results in over-investments by the firms. Second, short-term debt attenuates the relationship between real earnings management and investment inefficiency. It implies that a higher level of short-term debt weakens the adverse effects of real earnings management on the investment efficiency of the firm.Originality/valueThis study offers original findings on the issues pertaining to the quality of accounting and financial reporting in an emerging economy like Pakistan, where the implementation of regulations is weak in the corporate world and management frequently exploits shareholders' wealth for the short-term benefits.

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Leverage, debt maturity, and social capital

Cited by 98 publications

References 86 publications

CEO religious university affiliation and financial reporting quality

CEO religious university affiliation and financial reporting quality

Social Capital, Trusting, and Trustworthiness: Evidence from Peer-to-Peer Lending

The jinx of real earnings management: evidence from inefficient investments and debt maturity structure in Pakistan

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