EconPapers    
Economics at your fingertips  
 

Accounting Quality and Loan Pricing: The Effect of Cross-country Differences in Legal Enforcement

Seraina Anagnostopoulou

The International Journal of Accounting, 2017, vol. 52, issue 2, 178-200

Abstract: This study examines whether the strength of legal enforcement at the country level plays a role in the value-relevance of accounting quality for loan pricing determination, using an international sample of firms reporting under IFRS. The underlying hypothesis is that stronger vs. weaker enforcement should affect the informativeness of financial statements, due to their increased credibility, and thus results in a stronger influence of accounting quality on loan pricing, in case this information is considered more reliable by potential lenders. Evidence indicates that accounting quality is consequential for the determination of loan spread only in combination with the level of legal enforcement, and this only holds for the countries with stronger legal enforcement. This evidence indicates that financial statement quality information is value-relevant and has a significant impact on the determination of loan pricing only if this information is considered to be credible enough by loan providers in a country, and this is the case when legal enforcement is stronger.

Keywords: Accounting quality; IFRS; Legal enforcement; Bank loan terms and conditions (search for similar items in EconPapers)
JEL-codes: M40 M41 G20 G21 G28 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0020706316300966
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:52:y:2017:i:2:p:178-200

Access Statistics for this article

The International Journal of Accounting is currently edited by A. R. Abdel-Khalik

More articles in The International Journal of Accounting from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-10-30
Handle: RePEc:eee:accoun:v:52:y:2017:i:2:p:178-200