Private Loan Issuance and Risk Factor Disclosure

• 成果类型: Article
• 署名作者: Dai, Lili; Landsman, Wayne R.; Peng, Zihang
• 署名单位: University of New South Wales Sydney; University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0236
• 发表日期: 2024
• 页码: 169-196
• 关键词: Information asymmetry; voluntary disclosure; credit; investments; management; sales; QUALITY; FIRMS

摘要

This study provides evidence that private loan issuance offers opportunities for borrowers to learn new information about their own risks and subsequently disclose such information in their risk factor disclosures (RFDs) to satisfy lenders' demand for transparency about borrowers' risks. This loan issuance effect on risk disclosures is more pronounced when greater learning opportunities are present and when lenders have a stronger demand for borrowers' risk information transparency. Further analyses suggest that the enhanced risk disclosures following loan issuance not only benefit lenders by reducing the costs of accessing the secondary credit markets, but also create spillover benefits for equity investors by increasing risk information about the borrower and reducing uncertainty about the borrower's risk. Taken together, these findings suggest that borrowers' private interactions with lenders provide new opportunities for managers to generate and reflect fresh information in corporate risk disclosures, ultimately benefiting a wide range of capital market participants. Data Availability: Data are available from the sources identified in the paper.