Contracting and reporting conservatism around a change in fiduciary duties

• Main Authors: BENS, Daniel, HUANG, Sterling, TAN, Liang, WONGSUMWAI, Wan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Contracting Conservatism; Reporting Conservatism; Debt Contracting; Fiduciary Duties; Corporate Governance; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1884; https://ink.library.smu.edu.sg/context/soa_research/article/2911/viewcontent/Contracting_Conservatism_sv.pdf
• Institution: Singapore Management University

We exploit an influential 1991 Delaware court ruling to examine the impact of changes in managerial fiduciary duties on firms’ accounting and contracting choices. The ruling expanded directors’ fiduciary duties in favor of creditors and away from shareholders for a specific group of firms. Using a h...