 Financial statement comparability, state ownership, and the cost of debt: Evidence from ChinaMuhammad Ansar Majeed and Chao Yan Research in International Business and Finance, 2021, vol. 58, issue C Abstract: This study examines whether financial statement comparability (comparability) reduces credit risk and lowers the cost of debt. We hypothesize and document that higher comparability reduces information asymmetry and noise in debt contracting and makes monitoring of managerial activities easier, which reduces the cost of debt. However, the effect of comparability on the cost of debt for state-owned enterprises (SOEs) is insignificant. The results also suggest that competitive pressure and audit quality complement the relationship between comparability and the cost of debt. Our findings remain robust after controlling for endogeneity and in numerous empirical specifications. Overall, our results indicate that greater comparability improves credit decisions of the lenders and also benefits borrowers by reducing the financing cost. Keywords: Comparability; Cost of debt; SOEs; Competition; China (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:riibaf:v:58:y:2021:i:c:s0275531921001185 DOI: 10.1016/j.ribaf.2021.101497 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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