 Earnings informativeness, debt financing, and managerial characteristicsLi-Yu Chen, Jing-Chi Chen and Chun-Ming Li International Review of Economics & Finance, 2025, vol. 98, issue C Abstract: This study examines how the information content of earnings announcements interacts with managerial ability and overconfidence to influence debt financing choices. We categorize earnings announcements as informative or uninformative and as good or bad news. Analyzing a sample of 18,500 firm-years among U.S. listed firms over the period 2013–2022, we find that overconfident managers are more likely to choose debt financing, even if they have lower abilities, when earnings announcements are informative or contain good news. However, overconfident managers are less likely to choose debt financing when announcements are uninformative or contain bad news, even if they are highly skilled. Additionally, our analysis shows that strong internal controls, such as financial experts on audit committees or high audit quality, moderate the relationship between the information content of earnings announcements and debt financing choices. Keywords: Earnings announcement; Debt financing; Buy-and-hold returns; Information content; Analyst's earnings forecast (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000103 DOI: 10.1016/j.iref.2025.103847 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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