Debt Analysts' Views of Debt-Equity Conflicts of Interest

• 成果类型: Article
• 署名作者: De Franco, Gus; Vasvari, Florin P.; Vyas, Dushyantkumar; Wittenberg-Moerman, Regina
• 署名单位: University of Toronto; University of London; London Business School; University of Chicago
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50635
• 发表日期: 2014
• 页码: 571-604
• 关键词: information-content; price reactions; business press; Bond market; WEALTH; STOCK; determinants; earnings; performance; spreads

摘要

We investigate how the tone of sell-side debt analysts' discussions about debt-equity conflict events affects the informativeness of debt analysts' reports in debt markets. Conflict events such as mergers and acquisitions, debt issuance, share repurchases, or dividend payments potentially generate asset substitution or wealth expropriation by equity holders. We document that debt analysts routinely discuss these conflict events in their reports. More importantly, discussions about conflict events that we code as negative are associated with increases in credit spreads and bond trading volume. Consistent with the informational value of debt analysts' discussions in secondary debt markets, we find that negatively coded conflict discussions predict higher bond offering yields in the primary bond market. In additional analyses, we measure the tone of debt analysts' discussions based on their disagreement with the tone of equity analysts' discussions and find that the informativeness of debt analysts' reports is higher when our coding indicates that conflict events are viewed negatively by debt analysts but positively by equity analysts.