TY - JOUR
T1 - Pricing of innate and discretionary accruals in Australian debt
AU - Aldamen, Husam
AU - Duncan, Keith
PY - 2013/3
Y1 - 2013/3
N2 - This paper addresses the conflicting evidence on the role of accruals in debt pricing. We show that the two subcomponents of accruals quality, innate and discretionary accruals, both impact the debt pricing. Higher innate accruals increases cost of debt, consistent with the prior evidence (Francis, 2005; Gray, 2009). However, we also find that higher discretionary accruals reduce the cost of debt. This contrasts with the prior evidence of a positive association between discretionary accruals and cost and debt (Francis, 2005), and no association (Gray, 2009). We show that noisy measurement of cost of debt reconciles these results.
AB - This paper addresses the conflicting evidence on the role of accruals in debt pricing. We show that the two subcomponents of accruals quality, innate and discretionary accruals, both impact the debt pricing. Higher innate accruals increases cost of debt, consistent with the prior evidence (Francis, 2005; Gray, 2009). However, we also find that higher discretionary accruals reduce the cost of debt. This contrasts with the prior evidence of a positive association between discretionary accruals and cost and debt (Francis, 2005), and no association (Gray, 2009). We show that noisy measurement of cost of debt reconciles these results.
UR - http://www.scopus.com/inward/record.url?scp=84875369812&partnerID=8YFLogxK
U2 - 10.1111/j.1467-629X.2011.00458.x
DO - 10.1111/j.1467-629X.2011.00458.x
M3 - Article
AN - SCOPUS:84875369812
SN - 0810-5391
VL - 53
SP - 31
EP - 53
JO - Accounting and Finance
JF - Accounting and Finance
IS - 1
ER -