Financial Reporting Quality and External Debt Financing Constraints: The Case of Privately Held Firms

23 Pages Posted: 9 Sep 2016

See all articles by Shujun Ding

Shujun Ding

University of Ottawa - Telfer School of Management

Mingzhi Liu

University of Manitoba - Asper School of Business

Zhenyu Wu

University of Manitoba

Date Written: September 2016

Abstract

Using a sample consisting of 1,160,801 observations of privately held firms, we explore the relationship between earnings quality and privately held firms’ debt financing, access to debt, and cost of debt, as well as the moderating effects of provincial‐level economic development on this relationship. Our findings indicate that better earnings quality increases private firms’ access to debt financing and lowers their cost of debt. The empirical results also show that these effects are more pronounced in less developed provinces.

Keywords: Debt financing, Earnings quality, Economic imbalance, Private firm

Suggested Citation

Ding, Shujun and Liu, Mingzhi and Wu, Zhenyu, Financial Reporting Quality and External Debt Financing Constraints: The Case of Privately Held Firms (September 2016). Abacus, Vol. 52, Issue 3, pp. 351-373, 2016. Available at SSRN: https://ssrn.com/abstract=2836707 or http://dx.doi.org/10.1111/abac.12083

Shujun Ding (Contact Author)

University of Ottawa - Telfer School of Management ( email )

136 Jean-Jacques Lussier Street
Ottawa, Ontario K1N 6N5
Canada

Mingzhi Liu

University of Manitoba - Asper School of Business ( email )

460-181 Freedman Crescent
Winnipeg, Manitoba R3T 5V5
Canada
204-474-6847 (Phone)

HOME PAGE: http://umanitoba.ca/faculties/management/faculty_staff/academic_professors/mingzhi-liu.html

Zhenyu Wu

University of Manitoba ( email )

181 Freedman Crescent
Winnipeg, Manitoba R3T 5V4
Canada

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