Effects of corporate financial distress on peer firms: do intra-industry non-distressed firms become more conditionally conservative?

IF 2 4区管理学 Q2 BUSINESS, FINANCE

Accounting and Business Research Pub Date : 2022-05-27 DOI:10.1080/00014788.2022.2052006

Jie Sun, F. Yin, E. Altman, Lewis Makosa

引用次数: 3

Abstract

We study whether public announcements (through delisting warnings) of financial distress of some firms in an industry affect the conditional accounting conservatism of intra-industry non-distressed firms. We hypothesize that the lenders of non-distressed firms perceive higher riskiness and demand for stricter debt covenants and more efficient monitoring of debt contracts when some firms show signals of financial distress in that industry. Intra-industry non-distressed firms increase their levels of conditional conservatism to meet the lenders’ demands for stricter monitoring of debt contracts and to reduce debt costs. Using the delisting warning data from the Chinese stock exchanges, we find that financial distress announcements lead to increases in conditional conservatism of non-distressed firms in that industry. We provide new evidence for the spillover effects of financial distress within an industry and the usefulness of conditional conservatism in debt contracts.

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企业财务困境对同行企业的影响：行业内非困境企业是否变得更有条件保守？

我们研究了一个行业中一些公司的财务困境公告（通过退市警告）是否会影响行业内非困境公司的条件会计稳健性。我们假设，当一些公司在该行业表现出财务困境的信号时，非困境公司的贷款人会意识到更高的风险，并要求更严格的债务契约和更有效的债务合同监控。行业内未陷入困境的公司提高了其条件保守主义水平，以满足贷款人对债务合同进行更严格监控的要求，并降低债务成本。利用中国证券交易所的退市预警数据，我们发现财务困境公告会导致该行业非困境公司的条件保守性增加。我们为行业内财务困境的溢出效应以及条件保守主义在债务合同中的有用性提供了新的证据。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Accounting and Business Research BUSINESS, FINANCE-

CiteScore

3.40

自引率

11.80%

发文量

期刊介绍： Accounting and Business Research publishes papers containing a substantial and original contribution to knowledge. Papers may cover any area of accounting, broadly defined and including corporate governance, auditing and taxation. However the focus must be accounting, rather than (corporate) finance or general management. Authors may take a theoretical or an empirical approach, using either quantitative or qualitative methods. They may aim to contribute to developing and understanding the role of accounting in business. Papers should be rigorous but also written in a way that makes them intelligible to a wide range of academics and, where appropriate, practitioners.