Real earnings management and the cost of new corporate bonds
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 641-647 |
| Journal / Publication | Journal of Business Research |
| Volume | 67 |
| Issue number | 4 |
| Online published | 16 Feb 2013 |
| Publication status | Published - Apr 2014 |
Link(s)
Abstract
We examine the association between real earnings management and the cost of new bond issues of U.S. corporations. We consider three types of real earnings management: sales manipulation, overproduction, and the abnormal reduction of discretionary expenditures. We find that overproduction impairs credit ratings and that sales manipulation and overproduction are associated with higher bond yield spreads. Overall, our results imply that credit rating agencies and bondholders perceive real earnings management as a credit risk-increasing factor and thus require high risk premiums. © 2013 Elsevier Inc.
Research Area(s)
- Bond yield spread, Credit rating, New bond issue, Real earnings management
Citation Format(s)
Real earnings management and the cost of new corporate bonds. / Ge, Wenxia; Kim, Jeong-Bon.
In: Journal of Business Research, Vol. 67, No. 4, 04.2014, p. 641-647.Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
