Accounting Quality and Debt Concentration

• 成果类型: Article
• 署名作者: Li, Ningzhong; Lou, Yun; Otto, Clemens A.; Wittenberg-Moerman, Regina
• 署名单位: University of Texas System; University of Texas Dallas; Singapore Management University; University of Southern California
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/tar-2017-0250
• 发表日期: 2021
• 页码: 377-400
• 关键词: financial-reporting quality; internal control weaknesses; capital structure; corporate governance; contracting evidence; propensity score; MARKET REACTIONS; determinants; accruals; INFORMATION

摘要

We examine the relation between accounting quality and debt concentration in corporate capital structures (i.e., firms' tendency to rely predominantly on only a few types of debt). Motivated by theoretical and empirical research that supports a strong link between debt concentration and creditors' coordination costs and the importance of accounting quality in reducing these costs, we hypothesize that firms with higher accounting quality have less concentrated debt structures. Measuring accounting quality with a comprehensive index based on the occurrence of material internal control weaknesses, accounting restatements, SEC AAERs, and firms' reliance on small auditors, we find that higher accounting quality is indeed associated with less concentrated debt structures. This relation is stronger for firms with higher default risk, as the probability that creditors need to coordinate is higher, and for firms with lower liquidation values, as creditor coordination to avoid liquidation is more important.