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 metadatas

https://hal-hec.archives-ouvertes.fr/hal-02011410
Contributor : Antoine Haldemann <>
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

46