The Debt Contracting Value of Accounting Information and Loan Syndicate Structure

Ball, Ryan T.; Bushman, Robert M.; Vasvari, Florin P.

doi:10.2139/ssrn.928151

Cited by 156 publications

(193 citation statements)

References 51 publications

Supporting

Mentioning

182

Contrasting

Unclassified

Order By: Relevance

“…However, different from Francis et al (2009), our key measure of accounting conservatism is based on the models of Ball and Shivakumar (2005;2006) and Ball et al (2008) and is consistent with the extensive array of research that has adopted these models. Moreover, both the CEO and CFO can influence the quality of reported earnings (Bergstresser and Philippon 2006;Cheng and Warfield 2005;Jiang et al 2010).…”

Section: Introductionsupporting

confidence: 56%

CEO Gender, Ethical Leadership, and Accounting Conservatism

et al. 2014

View full text Add to dashboard Cite

Because male CEOs dominate corporate leadership, the literature on top management decision-making suffers from an implicit masculine bias. Although research indicates that males and females are biologically and psychologically different, the leadership characteristics of female CEOs are largely unexplored. Two of these characteristics, risk aversion and ethical sensitivity, are tied to key accounting issues, such as conservatism in financial reporting and steadfast opposition to fraud. In this study, we examine the relationship between CEO gender and accounting conservatism, and find a positive association between the two. Consistent with conventional wisdom, this association appears to be stronger in firms with high rather than low litigation and takeover risks. This study contributes to the ethics literature by highlighting the benefits of gender diversity in upholding the integrity of financial reporting.

show abstract

Section: Introductionsupporting

confidence: 56%

CEO Gender, Ethical Leadership, and Accounting Conservatism

et al. 2014

View full text Add to dashboard Cite

show abstract

“…Past literature shows that accounting information plays an important role in shaping debt contracts (Armstrong, Guay and Weber, 2010;Ball, Bushman, and Vasvari, 2008). To the best of our knowledge, our paper is the first to document statistically and economically significant effects of OCI volatility on the debt financing environment.…”

Section: Introductionmentioning

confidence: 65%

Does the Variability of Other Comprehensive Income (OCI) Play a Role in the Determination of Cost of Debt, Capital Structure and Credit Ratings?

et al. 2017

View full text Add to dashboard Cite

In this paper, we focus on the usefulness of other comprehensive income (OCI) to debt investors. We conceptualize OCI's usefulness to be its risk relevance. We hypothesize that credit risk is associated with OCI volatility and so we contribute to the debate whether this volatility is viewed by creditors as capturing useful information about debt risk or just "noise." Specifically, we consider whether OCI's volatility that is linked to accounting standards in the recent two decades is associated with cost of debt, non-price terms of debt contracting (i.e. covenants, security), capital and maturity structure, and credit ratings. We construct three samples to conduct our tests: (1) a new loan sample from Dealscan and (2) a comprehensive sample from COMPUSTAT and (3) credit ratings sample. We find strong evidence that higher volatility of OCI is associated with a higher cost of debt, higher likelihood of collateral requirement, and stronger credit rationing (lower use of debt). We also find statistically significant but economically weak evidence that OCI volatility is related to shorter debt maturity and lower credit ratings. Overall, our evidence suggests that OCI volatility provides useful information to credit markets and shapes debt contracting and the firm's capital structure accordingly.

show abstract

“…The excessive concentration of prior research on equity market participants as the primary users of accounting information may lead to an incomplete understanding of the use of information by capital providers, both by academics and standard setters, since the evidence indicates that debt and equity providers may require different information and use it in different ways (Ball, Bushman and Vasvari, 2008a;Kothari, Ramanna and Skinner, 2010). Because of differences in their importance, characteristics and information needs, we separately examine the evidence on different capital providers' information usage, splitting them into equity investors, debt providers and trade creditors.…”

Section: Insert Table 1 About Herementioning

confidence: 99%

“…On average, debt contracts contain around three financial covenants (Ball et al, 2008a;Christensen and Nikolaev, 2012).…”

Section: The Use Of Accounting Information In Debt Contractsmentioning

confidence: 99%

Who Uses Financial Reports and for What Purpose? Evidence from Capital Providers

Cascino

Clatworthy

Osma

et al. 2014

Accounting in Europe

View full text Add to dashboard Cite

We review the academic literature on the use of financial reporting information by capital providers. We classify our findings by investor type and by information objective. While most capital providers use accounting information, our survey indicates that they do so in a variety of ways with financial reporting information competing with other sources of information. We also find that information intermediaries are influential in both credit and equity markets, making the identification of a typical target 'user' inherently difficult. Our main findings question the underlying objective of the Conceptual Framework to guide the development of standards for general-purpose financial statements to provide a typical knowledgeable investor with a true and fair view about the reporting entity. Finally, we identify gaps in the literature and suggest areas where future research can help inform important academic and policy debates.

show abstract

The Debt Contracting Value of Accounting Information and Loan Syndicate Structure

Cited by 156 publications

References 51 publications

CEO Gender, Ethical Leadership, and Accounting Conservatism

CEO Gender, Ethical Leadership, and Accounting Conservatism

Does the Variability of Other Comprehensive Income (OCI) Play a Role in the Determination of Cost of Debt, Capital Structure and Credit Ratings?

Who Uses Financial Reports and for What Purpose? Evidence from Capital Providers

Contact Info

Product

Resources

About