Accruals quality and the cost of debt: Evidence from Vietnam |
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| Institution: | 1. School of Economics and Management, Beijing Jiaotong University, Beijing, 100044, PR China;2. School of Business and Law, Edith Cowan University, Joondalup, WA, 6027, Australia;1. Henley Business School, University of Reading, Reading RG6 6UD, UK;2. Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, UK |
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| 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. |
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