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Accruals quality and the cost of debt: Evidence from Vietnam

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  • Le, Ha Thi Thu
  • Vo, Xuan Vinh
  • Vo, Thi Thuc

Abstract

This study investigates the impact of accruals quality (AQ) on the cost of debt. Using a sample of Vietnamese listed companies during the period 2012–2017, we show that AQ has a significant negative relation with the cost of debt. Particularly, the 10% best AQ firms enjoy a 1.35% lower interest costs than the 10% worst AQ firms. Furthermore, the discretionary AQ component has a significant negative association with the cost of debt, while innate AQ shows an insignificant impact on the cost of debt. The study delivers an important message to firms regarding the economic benefits of providing high-quality accounting information.

Suggested Citation

  • Le, Ha Thi Thu & Vo, Xuan Vinh & Vo, Thi Thuc, 2021. "Accruals quality and the cost of debt: Evidence from Vietnam," International Review of Financial Analysis, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finana:v:76:y:2021:i:c:s1057521921000697
    DOI: 10.1016/j.irfa.2021.101726
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    Cited by:

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    2. Nyanine Chuele Fonou Dombeu & Bomi Cyril Nomlala, 2023. "Earnings Quality Research: Trend, Recent Evidence and Future Direction," International Review of Management and Marketing, Econjournals, vol. 13(5), pages 1-8, September.

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    More about this item

    Keywords

    Accruals quality; Cost of debt; Discretionary accruals quality; Innate accruals quality; Information risk;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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