Accounting restatements and external financing choices

There is little research on how accounting information quality affects firms’ external financing choices. In this paper, we use accounting restatement as a proxy for the reduced credibility of accounting information and investigate how restatement affects a firm’s external financing choices. We find...

Full description

Saved in:
Bibliographic Details
Main Authors: CHEN, Xia, CHENG, Qiang, Lo, Alvis
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2012
Subjects:
Online Access:https://ink.library.smu.edu.sg/soa_research/821
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Singapore Management University
Language: English
id sg-smu-ink.soa_research-1820
record_format dspace
spelling sg-smu-ink.soa_research-18202011-08-03T07:30:04Z Accounting restatements and external financing choices CHEN, Xia CHENG, Qiang Lo, Alvis There is little research on how accounting information quality affects firms’ external financing choices. In this paper, we use accounting restatement as a proxy for the reduced credibility of accounting information and investigate how restatement affects a firm’s external financing choices. We find that for restatement firms that obtain external financing after restatements, they rely more on debt financing, especially private debt financing, and less on equity financing. The increase in debt financing is more pronounced for firms with more severe restatements. Our evidence indicates that accounting quality affects capital providers’ resource allocations and that debt holders help alleviate information problems after accounting restatements. 2012-01-01T08:00:00Z text https://ink.library.smu.edu.sg/soa_research/821 Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University earnings restatements external financing Accounting Corporate Finance
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic earnings restatements
external financing
Accounting
Corporate Finance
spellingShingle earnings restatements
external financing
Accounting
Corporate Finance
CHEN, Xia
CHENG, Qiang
Lo, Alvis
Accounting restatements and external financing choices
description There is little research on how accounting information quality affects firms’ external financing choices. In this paper, we use accounting restatement as a proxy for the reduced credibility of accounting information and investigate how restatement affects a firm’s external financing choices. We find that for restatement firms that obtain external financing after restatements, they rely more on debt financing, especially private debt financing, and less on equity financing. The increase in debt financing is more pronounced for firms with more severe restatements. Our evidence indicates that accounting quality affects capital providers’ resource allocations and that debt holders help alleviate information problems after accounting restatements.
format text
author CHEN, Xia
CHENG, Qiang
Lo, Alvis
author_facet CHEN, Xia
CHENG, Qiang
Lo, Alvis
author_sort CHEN, Xia
title Accounting restatements and external financing choices
title_short Accounting restatements and external financing choices
title_full Accounting restatements and external financing choices
title_fullStr Accounting restatements and external financing choices
title_full_unstemmed Accounting restatements and external financing choices
title_sort accounting restatements and external financing choices
publisher Institutional Knowledge at Singapore Management University
publishDate 2012
url https://ink.library.smu.edu.sg/soa_research/821
_version_ 1770571037022355456