Pricing of innate and discretionary accruals in Australian debt

Husam Aldamen, Keith Duncan

Research output: Contribution to journalArticleResearchpeer-review

10 Citations (Scopus)
14 Downloads (Pure)

Abstract

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.

Original languageEnglish
Pages (from-to)31-53
Number of pages23
JournalAccounting and Finance
Volume53
Issue number1
DOIs
Publication statusPublished - Mar 2013

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Cost of debt
Pricing
Discretionary accruals
Debt
Accruals
Costs
Accruals quality

Cite this

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Pricing of innate and discretionary accruals in Australian debt. / Aldamen, Husam; Duncan, Keith.

In: Accounting and Finance, Vol. 53, No. 1, 03.2013, p. 31-53.

Research output: Contribution to journalArticleResearchpeer-review

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