Abstract
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
9-30-2007
Document Type
Article
Department, Program, or Center
Accounting (SCB)
Recommended Citation
Ball, R., Robin, A. & Sadka, G. Rev Acc Stud (2008) 13: 168. https://doi.org/10.1007/s11142-007-9064-x
Campus
RIT – Main Campus
Comments
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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