We hypothesize debt markets – not equity markets – are the primary influence on “association” metrics studied since Ball and Brown (1968). Debt markets demand high scores on timeliness, conservatism and Lev’s (1989) R2, because debt covenants utilize reported numbers. Equity markets do not rate financial reporting consistently with these metrics, because (among other things) they control for the total information incorporated in equity process. Single-country studies shed little light on the relative influences of debt and equity, because their firms operate under a homogeneous reporting regime. International data are consistent with our hypothesis. This is a fundamental issue in accounting.

Publication Date



This is the pre-print of a paper published by Springer. The final publication is available at link.springer.com via https://doi.org/10.1007/s11142-007-9064-x

© Springer Science+Business Media, LLC 2008

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Document Type


Department, Program, or Center

Accounting (SCB)


RIT – Main Campus