Download This PaperRefinancing Pressure and Earnings Management: Evidence from Changes in Short-Term Debt and Discretionary Accruals
16 Pages Posted: 28 May 2012 Last revised: 21 Feb 2018
Date Written: February 20, 2018
Abstract
In this paper, we investigate whether refinancing pressure leads managers to manipulate earnings. Our tests examine the relation between changes in short-term debt and discretionary accruals. We find that firms have higher discretionary accruals during periods of increasing short-term debt. We also find that this relationship is stronger for firms that ultimately obtain new loan financing. Finally, we show that the presence of investment grade debt attenuates the relationship between discretionary accruals and refinancing pressure.
Keywords: capital structure, accruals
JEL Classification: G32, M41
Suggested Citation: Suggested Citation
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