Asymmetric timely loss recognition, adverse shocks to external capital, and underinvestment: Evidence from the collapse of the junk bond market

• 成果类型: Article
• 署名作者: Kim, Jaewoo
• 署名单位: University of Rochester
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2017.11.010
• 发表日期: 2018
• 关键词: ACCOUNTING CONSERVATISM; corporate governance; imperfect information; INVESTMENT; credit; earnings; FIRMS; Timeliness; QUALITY

摘要

Using the collapse of the junk bond market in the early 1990s as an exogenous shock to external capital, I document, in both difference-in-differences and triple difference designs, that speculative-grade firms that recognize economic losses in a timely manner experience a smaller reduction in investment following the collapse. The effect is more pronounced for speculative-grade firms with a low level of asset liquidation value. Using the excess bond premium as a proxy for fluctuations in the supply of capital, I also extend the generalizability of my findings to a broader sample of 84,421 firm-years over the 1972-2011 period. (C) 2017 Elsevier B.V. All rights reserved.