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Real earnings management activities prior to bond issuance

Real earnings management activities prior to bond issuance
Real earnings management activities prior to bond issuance
We examine real activities manipulation by firms prior to their debt issuances and how such manipulation activities affect bond yield spreads. We find that bond-issuing firms increase their real activities manipulation in the five quarters leading to a bond issuance. We document an inverse association between yield spread and pre-issue real activities manipulation, i.e., firms engaged in abnormally high levels of real activities manipulation are associated with subsequent lower cost of debt.
164-177
Mellado-Cid, Cristhian
155cfb09-e6f9-488c-bb2e-91dcd77a9bbc
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Mellado-Cid, Cristhian
155cfb09-e6f9-488c-bb2e-91dcd77a9bbc
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b

Mellado-Cid, Cristhian, Jory, Surendranath and Ngo, Thanh (2017) Real earnings management activities prior to bond issuance. BRQ Business Research Quarterly, 20 (3), 164-177. (doi:10.1016/j.brq.2017.04.004).

Record type: Article

Abstract

We examine real activities manipulation by firms prior to their debt issuances and how such manipulation activities affect bond yield spreads. We find that bond-issuing firms increase their real activities manipulation in the five quarters leading to a bond issuance. We document an inverse association between yield spread and pre-issue real activities manipulation, i.e., firms engaged in abnormally high levels of real activities manipulation are associated with subsequent lower cost of debt.

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More information

Accepted/In Press date: 2 May 2017
e-pub ahead of print date: 1 June 2017
Published date: July 2017
Organisations: Banking & Finance

Identifiers

Local EPrints ID: 408417
URI: http://eprints.soton.ac.uk/id/eprint/408417
DOI: doi:10.1016/j.brq.2017.04.004
PURE UUID: 0a2119db-5cec-4082-8325-c7601104e13c
ORCID for Surendranath Jory: ORCID iD orcid.org/0000-0002-8265-0001

Catalogue record

Date deposited: 20 May 2017 04:03
Last modified: 16 Mar 2024 05:19

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Contributors

Author: Cristhian Mellado-Cid
Author: Surendranath Jory ORCID iD
Author: Thanh Ngo

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