CEO Inside Debt and Accounting Conservatism

• 成果类型: Article
• 署名作者: Wang, Cong; Xie, Fei; Xin, Xiangang
• 署名单位: The Chinese University of Hong Kong, Shenzhen; University of Delaware; City University of Hong Kong
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12372
• 发表日期: 2018
• 页码: 2131-2159
• 关键词: asymmetric timeliness; corporate-debt; Control rights; earnings; firm; INFORMATION; incentives; OWNERSHIP; holdings

摘要

We examine the relation between accounting conservatism and inside debt held by managers in the form of pension benefits and deferred compensation. We find that financial reporting is less conservative in firms whose CEOs hold more inside debt, particularly in firms with high default risk and agency costs of debt. This is consistent with our hypothesis that by aligning managerial incentives more closely with those of debtholders, inside debt reduces debtholders' expropriation concerns and thus their demand for accounting conservatism. Our results are robust to identification strategies addressing the endogeneity of CEO inside debt and to alternative measures of accounting conservatism.