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Impact of litigation risk on the cost of corporate debt financing: The moderating role of earnings management strategies

Author

Listed:
  • Cheng, Xuemei
  • Zheng, Yinglong
  • Bi, Siyuan
  • Chen, Fangxin

Abstract

Using a sample of non-financial listed companies from 2009 to 2022, this study examines the relationships among litigation risk, earnings management strategies, and corporate debt financing costs. Findings show that litigation risk increases corporate debt financing costs, with earnings management significantly moderating this relationship. The moderating effect of earnings management on this relationship exhibits heterogeneity across different corporate characteristics.

Suggested Citation

  • Cheng, Xuemei & Zheng, Yinglong & Bi, Siyuan & Chen, Fangxin, 2025. "Impact of litigation risk on the cost of corporate debt financing: The moderating role of earnings management strategies," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006324
    DOI: 10.1016/j.frl.2025.107372
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    References listed on IDEAS

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    Cited by:

    1. Luo, Ruixin & Fu, Rong, 2025. "CEO legal liability, financing cost, and Firms’ S&T innovation efficiency," Finance Research Letters, Elsevier, vol. 86(PA).
    2. Shi, Jiawei, 2025. "Human capital mobility and corporate management cost," Finance Research Letters, Elsevier, vol. 82(C).

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