Does the Tone of Management Discussion and Analysis Associate with Corporate Debt Expansion? Evidence from A-share Listed Companies

Qingyuan Wu (), Ke Zheng () and Xue Wang ()
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Qingyuan Wu: School of Economics and Management, Hanshan Normal University
Ke Zheng: Hanshan Normal University
Xue Wang: Department of Economics, Emory University

Annals of Economics and Finance, 2024, vol. 25, issue 2, 705-739

Abstract: Analyzing panel data from China's A-share non-financial firms, this study detects a robust correlation between the affirmative tone in annual MD&A sections and corporate debt growth from 2007 to 2021. The positive tone's influence on debt is both immediate and moderated by profitability, operational risk, and internal controls, without apparent collusion with earnings management. Firms with superior resources exhibit reduced reliance on MD&A tone for debt financing, yet those with moderate resources strategically employ it to augment their debt appeal, providing strategic debt financing insights.

Keywords: MD&A tone; Corporate debt expansion; Text information; Earnings management (search for similar items in EconPapers)
JEL-codes: G12 G14 M41 (search for similar items in EconPapers)
Date: 2024
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