{"title":"Creditor enforcement and accounting quality: A natural experiment","authors":"Siddharth M. Bhambhwani","doi":"10.1016/j.jaccpubpol.2024.107214","DOIUrl":null,"url":null,"abstract":"<div><p>The SARFAESI Act of 2002 strengthened creditor enforcement rights in India by granting banks broad new powers to enforce claims against delinquent secured borrowers. Using a difference-in-differences design, I find that firms with high levels of secured borrowing (i.e., treated firms) exhibit an improvement in accounting quality post-reform. The main findings are especially stronger among smaller firms and firms not affiliated with business groups. I also document significant cross-sectional variation in the main results based on borrowers' financial constraints and banking relationships. These findings are consistent with banks increasing monitoring of borrowers under a stronger creditor rights regime. Overall, this study provides new evidence that stronger creditor rights translate to higher accounting quality.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"46 ","pages":"Article 107214"},"PeriodicalIF":3.3000,"publicationDate":"2024-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Accounting and Public Policy","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0278425424000371","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
The SARFAESI Act of 2002 strengthened creditor enforcement rights in India by granting banks broad new powers to enforce claims against delinquent secured borrowers. Using a difference-in-differences design, I find that firms with high levels of secured borrowing (i.e., treated firms) exhibit an improvement in accounting quality post-reform. The main findings are especially stronger among smaller firms and firms not affiliated with business groups. I also document significant cross-sectional variation in the main results based on borrowers' financial constraints and banking relationships. These findings are consistent with banks increasing monitoring of borrowers under a stronger creditor rights regime. Overall, this study provides new evidence that stronger creditor rights translate to higher accounting quality.
期刊介绍：
The Journal of Accounting and Public Policy publishes research papers focusing on the intersection between accounting and public policy. Preference is given to papers illuminating through theoretical or empirical analysis, the effects of accounting on public policy and vice-versa. Subjects treated in this journal include the interface of accounting with economics, political science, sociology, or law. The Journal includes a section entitled Accounting Letters. This section publishes short research articles that should not exceed approximately 3,000 words. The objective of this section is to facilitate the rapid dissemination of important accounting research. Accordingly, articles submitted to this section will be reviewed within fours weeks of receipt, revisions will be limited to one, and publication will occur within four months of acceptance.
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