Advanced Search
MyIDEAS: Login to save this article or follow this journal

The Debt-Contracting Value of Accounting Information and Loan Syndicate Structure

Contents:

Author Info

  • RYAN BALL
  • ROBERT M. BUSHMAN
  • FLORIN P. VASVARI
Registered author(s):

    Abstract

    ABSTRACT We investigate how both the ownership structure and explicit contractual structure of syndicated loan deals are shaped by the debt-contracting value (DCV) of borrowers' accounting information. DCV captures the inherent ability of firms' accounting numbers to capture credit quality deterioration in a timely fashion. We hypothesize and document that when a borrower's accounting information possesses higher DCV, information asymmetry between the lead arranger and other syndicate participants is lower, allowing lead arrangers to hold a smaller proportion of new loan deals. Further, we document that the influence of DCV on the proportion of the loan retained is conditional on the lead arranger's reputation, the existence of a credit rating, and the lead arranger's previous relationships with the same borrower. Finally, we find that when loans include performance pricing provisions, the likelihood that the single performance measure used is an accounting ratio, rather than a credit rating, is increasing in DCV. Copyright University of Chicago on behalf of the Institute of Professional Accounting, 2008.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.blackwell-synergy.com/servlet/useragent?func=synergy&synergyAction=showTOC&journalCode=joar&volume=46&issue=2&year=2008&part=null
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Accounting Research.

    Volume (Year): 46 (2008)
    Issue (Month): 2 (05)
    Pages: 247-287

    as in new window
    Handle: RePEc:bla:joares:v:46:y:2008:i:2:p:247-287

    Contact details of provider:
    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0021-8456

    Order Information:
    Web: http://www.blackwellpublishing.com/subs.asp?ref=0021-8456

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Wittenberg-Moerman, Regina, 2008. "The role of information asymmetry and financial reporting quality in debt trading: Evidence from the secondary loan market," Journal of Accounting and Economics, Elsevier, vol. 46(2-3), pages 240-260, December.
    2. Julian Mattes & Sascha Steffen & Mark Wahrenburg, 2013. "Do Information Rents in Loan Spreads Persist over the Business Cycles?," Journal of Financial Services Research, Springer, vol. 43(2), pages 175-195, April.
    3. Armstrong, Christopher S. & Guay, Wayne R. & Weber, Joseph P., 2010. "The role of information and financial reporting in corporate governance and debt contracting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 179-234, December.
    4. Takuya Iwasaki & Shota Otomasa & Atsushi Shiiba & Akinobu Shuto, 2012. "Excess Executive Compensation and the Demand for Accounting Conservatism," Discussion Paper Series DP2012-08, Research Institute for Economics & Business Administration, Kobe University.
    5. Jeong-Bon Kim & Byron Song & Judy Tsui, 2013. "Auditor size, tenure, and bank loan pricing," Review of Quantitative Finance and Accounting, Springer, vol. 40(1), pages 75-99, January.
    6. Andrade, Sandro C. & Bernile, Gennaro & Hood, Frederick M., 2014. "SOX, corporate transparency, and the cost of debt," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 145-165.
    7. Costello, Anna M., 2013. "Mitigating incentive conflicts in inter-firm relationships: Evidence from long-term supply contracts," Journal of Accounting and Economics, Elsevier, vol. 56(1), pages 19-39.
    8. Francis, Bill & Hasan, Iftekhar & Wu, Qiang, 2011. "The impact of CFO gender on bank loan contracting," Research Discussion Papers 18/2011, Bank of Finland.
    9. Ge, Wenxia & Kim, Jeong-Bon & Song, Byron Y., 2012. "Internal governance, legal institutions and bank loan contracting around the world," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 413-432.
    10. Chan, Lilian H. & Chen, Kevin C.W. & Chen, Tai-Yuan, 2013. "The effects of firm-initiated clawback provisions on bank loan contracting," Journal of Financial Economics, Elsevier, vol. 110(3), pages 659-679.
    11. Leung, P.Y.E., 2013. "The influence of reporting standards and inter-firm relationships on financial reporting," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5919118, Tilburg University.
    12. Chen, Jeff Zeyun & Lobo, Gerald J. & Wang, Yanyan & Yu, Lisheng, 2013. "Loan collateral and financial reporting conservatism: Chinese evidence," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 4989-5006.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:bla:joares:v:46:y:2008:i:2:p:247-287. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.