How does managerial opportunism affect the cost of debt financing?

Hatem Ghouma

Research in International Business and Finance, 2017, vol. 39, issue PA, 13-29

Abstract: Using managerial entrenchment and earnings management activities to proxy for managers’ opportunism, this paper explores the effect of the managers’ behaviour on the cost of debt financing. The study shows that low levels of managerial opportunism result in firms enjoying lower corporate bond costs and higher credit ratings. Moreover, the findings suggest that higher bond costs and lower credit ratings are generally associated with income-increasing earnings management activities.

Keywords: Managerial opportunism; Entrenchment; Earnings management; Debt costs and ratings; Regulation change (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 K22 K42 M41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:39:y:2017:i:pa:p:13-29

DOI: 10.1016/j.ribaf.2016.07.007

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