The Impact of Financial Reporting Quality on Debt Contracting: Evidence from Internal Control Weakness Reports
研究了财务报告质量如何影响贷款人使用的监督机制，发现企业存在重大内部控制缺陷时，贷款人会减少财务契约和基于财务比率的绩效定价条款的使用，转而采用价格、安全保护和基于信用评级的替代条款。
ABSTRACT We examine the effect of financial reporting quality on the trade‐off between monitoring mechanisms used by lenders. We rely on Sarbanes‐Oxley internal control reports to measure financial reporting quality. We find that when a firm experiences a material internal control weakness, lenders decrease their use of financial covenants and financial‐ratio‐based performance pricing provisions and substitute them with alternatives, such as price and security protections and credit‐rating‐based performance pricing provisions. We also find that changes in debt contract design following internal control weaknesses are substantially different from those following restatements, where lenders impose tighter monitoring on managers’ actions, but do not decrease their use of financial statement numbers.