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Financial Statement Comparability and New Debt Issues

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Listed:
  • Aaron Crabtree
  • Bo Ouyang
  • Huishan Wan

Abstract

Using a large sample of firms issuing new debts, this paper investigates how a firm’s financial statements comparability affects its cost of new debt issues. We predict and find that higher comparability is associated with (1) higher bond ratings and (2) lower bond yield spreads when companies issue new debts. Our results are consistent with the view that bond rating analysts and bond investor favor greater comparability when they evaluate new bonds and make investment decisions.Â

Suggested Citation

  • Aaron Crabtree & Bo Ouyang & Huishan Wan, 2019. "Financial Statement Comparability and New Debt Issues," Accounting and Finance Research, Sciedu Press, vol. 8(2), pages 143-143, May.
    • Handle: RePEc:jfr:afr111:v:8:y:2019:i:2:p:143
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    References listed on IDEAS

    as
    1. Anderson, Ronald C. & Mansi, Sattar A. & Reeb, David M., 2004. "Board characteristics, accounting report integrity, and the cost of debt," Journal of Accounting and Economics, Elsevier, vol. 37(3), pages 315-342, September.
    2. Ciao‐Wei Chen & Daniel W. Collins & Todd D. Kravet & Richard D. Mergenthaler, 2018. "Financial Statement Comparability and the Efficiency of Acquisition Decisions," Contemporary Accounting Research, John Wiley & Sons, vol. 35(1), pages 164-202, March.
    3. Pittman, Jeffrey A. & Fortin, Steve, 2004. "Auditor choice and the cost of debt capital for newly public firms," Journal of Accounting and Economics, Elsevier, vol. 37(1), pages 113-136, February.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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