Accounting Quality and Debt Concentration: Evidence from Internal Control Weakness Disclosures - Archive ouverte HAL Access content directly
Preprints, Working Papers, ... Year :

Accounting Quality and Debt Concentration: Evidence from Internal Control Weakness Disclosures

, (1) , (2) ,
1
2
Ningzhong Li
  • Function : Author
Regina Wittenberg Moerman
  • Function : Author

Abstract

This paper examines how accounting quality affects the degree of debt concentration in corporate capital structures (i.e., a firm’s tendency to predominantly rely on only a few types of debt). Motivated by theoretical and empirical research that supports a strong link between creditors’ coordination costs and debt concentration and the importance of accounting quality in reducing these coordination costs, we hypothesize that firms with low accounting quality have a more concentrated debt structure. Measuring financial reporting quality by the disclosure of material internal control weaknesses over financial reporting (ICWs), we find that ICWs lead to a significantly more concentrated debt structure. We also show that the effect of ICWs on the degree of debt concentration is stronger for more severe ICW disclosures and for firms with a higher credit risk, further reinforcing the importance of financial reporting quality in determining debt concentration.
Not file

Dates and versions

hal-02011410 , version 1 (07-02-2019)

Licence

Copyright

Identifiers

  • HAL Id : hal-02011410 , version 1

Cite

Ningzhong Li, Yun Lou, Clemens Otto, Regina Wittenberg Moerman. Accounting Quality and Debt Concentration: Evidence from Internal Control Weakness Disclosures. 2014. ⟨hal-02011410⟩

Collections

HEC CNRS
127 View
0 Download

Share

Gmail Facebook Twitter LinkedIn More