HAL will be down for maintenance from Friday, June 10 at 4pm through Monday, June 13 at 9am. More information
Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

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

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.
Document type :
Preprints, Working Papers, ...
Complete list of metadata

https://hal-hec.archives-ouvertes.fr/hal-02011410
Contributor : Antoine Haldemann Connect in order to contact the contributor
Submitted on : Thursday, February 7, 2019 - 8:48:26 PM
Last modification on : Friday, February 8, 2019 - 1:28:23 AM

Licence


Copyright

Identifiers

  • HAL Id : hal-02011410, version 1

Collections

Citation

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

Share

Metrics

Record views

119