PERFORMANCE PRICING DEBTS AND EARNINGS MANAGEMENT

Yan Hu ； Connie Mao

《Advances in Quantitative Analysis of Finance and Accounting》 14期 (2016/12) Pp. 43-75

https://doi.org/10.6293/AQAFA.2016.14.02

摘要

This paper examines whether and to what extent a firm's performance pricing loans provide an incentive for managers to manipulate earnings more aggressively. We find that firms with a higher slope of the performance pricing schedule have significantly larger discretionary accruals, which is consistent with the prediction of the positive accounting theory (Watts & Zimmerman, 1986, 1990). However, the positive relationship between the slope of performance pricing schedule and discretionary accruals is significantly attenuated in firms borrowing from high reputation banks or banks with a prior lending relationship. These results suggest that bank reputation and prior lending relation serve as an effective monitoring mechanism, which in turn mitigates managers' incentive and ability to manipulate earnings.

關鍵字

Performance Pricing ； Debt Contracting ； Earnings Management ； Discretionary Accruals ； Performance Pricing Schedule

參考文獻

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