European Business Schools Librarian's Group
Home About Series Subject/JEL codes Advanced Search
HEC Paris. Research Department Les Cahiers de Recherche - HEC Paris

No 1078:
Accounting Quality and Debt Concentration: Evidence from Internal Control Weakness Disclosures

Yun Lou () and Clemens Otto ()

Abstract: This paper examines the effect of accounting quality on the degree of debt concentration (i.e., the tendency to rely predominantly on only a few types of debt) in corporate capital structures. Building on theoretical and empirical studies arguing that asymmetric information increases the renegotiation and bankruptcy costs associated with relying on multiple types of debt, the authors predict that lower quality accounting numbers induce firms to choose more concentrated debt structures. Measuring (low) accounting quality with the existence of material internal control weaknesses over financial reporting (ICWs), they find evidence consistent with their prediction: Firms choose more concentrated debt structures after experiencing ICWs. This effect is stronger for more severe ICWs (i.e., company-level rather than account specific ICWs). We find similar results using accounting restatements and audit quality as alternative measures of accounting quality.

Keywords: N/A; (follow links to similar papers)

52 pages, December 1, 2014

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

papers.cfm?abstract_id=2532386    PDF-file
Download Statistics

Questions (including download problems) about the papers in this series should be directed to Sandra Dupouy ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design Joakim Ekebom

Handle: RePEc:ebg:heccah:1078 This page was generated on 2015-01-30 18:33:15