Credit Default Swaps and Managers' Voluntary Disclosure

• 成果类型: Article
• 署名作者: Kim, Jae B.; Shroff, Pervin; Vyas, Dushyantkumar; Wittenberg-Moerman, Regina
• 署名单位: Lehigh University; University of Minnesota System; University of Minnesota Twin Cities; University of Toronto; University of Toronto; University of Southern California
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12194
• 发表日期: 2018
• 页码: 953-988
• 关键词: stock return volatility; corporate governance; financial intermediation; institutional investors; Accounting information; EARNINGS FORECASTS; loan sales; discretionary disclosure; private information; empirical-analysis

摘要

We investigate how the availability of traded credit default swaps (CDSs) affects the referenced firms' voluntary disclosure choices. CDSs enable lenders to hedge their credit risk exposure, weakening their incentives to monitor borrowers. We predict that reduced lender monitoring in turn leads shareholders to intensify their monitoring and demand increased voluntary disclosure from managers. Consistent with this expectation, we find that managers are more likely to issue earnings forecasts and forecast more frequently when traded CDSs reference their firms. We further find a stronger impact of CDS availability on firm disclosure when (1) lenders have higher ability and propensity to hedge credit risk using CDSs, and (2) lender monitoring incentives and monitoring strength are weaker. Consistent with an increase in shareholder demand for public information disclosure induced by a reduction in lender monitoring, we find a stronger effect of CDSs on voluntary disclosure for firms with higher institutional ownership and stronger corporate governance. Overall, our findings suggest that firms with traded CDS contracts enhance their voluntary disclosure to offset the effect of reduced monitoring by CDS-protected lenders.