Financial Reporting Quality and External Debt Financing Constraints: The Case of Privately Held Firms

• DOI: 10.1111/abac.12083
• Publication Date: 2016-08-12T08:16:58Z
• Authors: Shujun Ding; Mingzhi Liu; Zhenyu Wu
• Keywords: Debt financing; External financing; Earnings quality; Sample (material); Debt ratio; Earnings Management; Senior debt; Recourse debt

Using a sample consisting of 1,160,801 observations privately held firms, we explore the relationship between earnings quality and firms’ debt financing, access to debt, cost as well moderating effects provincial‐level economic development on this relationship. Our findings indicate that better increases private financing lowers their debt. The empirical results also show these are more pronounced in less developed provinces.