Financial statement comparability,state ownership,and the cost of debt: Evidence from China |
| |
Institution: | 1. International Business School, Zhejiang Gongshang University, No.18 Xuezheng Street, Xiasha, Hangzhou, 310018, China;2. School of Accounting, Zhongnan University of Economics and Law, 182# Nanhu Avenue, East Lake High-tech Development Zone, Wuhan, 430073, China |
| |
Abstract: | This study examines whether financial statement comparability (comparability) reduces credit risk and lowers the cost of debt. We hypothesize and document that higher comparability reduces information asymmetry and noise in debt contracting and makes monitoring of managerial activities easier, which reduces the cost of debt. However, the effect of comparability on the cost of debt for state-owned enterprises (SOEs) is insignificant. The results also suggest that competitive pressure and audit quality complement the relationship between comparability and the cost of debt. Our findings remain robust after controlling for endogeneity and in numerous empirical specifications. Overall, our results indicate that greater comparability improves credit decisions of the lenders and also benefits borrowers by reducing the financing cost. |
| |
Keywords: | Comparability Cost of debt SOEs Competition China |
本文献已被 ScienceDirect 等数据库收录! |
|