Does Debt Financing Affect the Sustainability of Transparent Accounting Information?

Hyun-Uk Jung, Tae-Hyoung Mun and Taewoo Roh
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Hyun-Uk Jung: School of Business, Donga-A University, Busan 49236, Korea
Tae-Hyoung Mun: Department of Business Administration, Mokwon University, Daejeon 35349, Korea
Taewoo Roh: Global Business School, Soonchunhyang University, Unitopia 901, Soonchunhyang-ro 22, Sinchang-myeon, Asan-si, Chungchungnam-do 31538, Korea

Sustainability, 2021, vol. 13, issue 7, 1-11

Abstract: With the classification of debt financing into private debt (borrowing) and public debt (bond), this study aims to figure out the relationship between corporate debt financing and transparent accounting information sustainability. Debt financing of a firm was measured as a ratio of private debt to sum of private and public debt while sustainability of transparent accounting information was measured as a matching level. The sample is selected from corporations listed on the stock market in the Republic of Korea, except for the financial industry, from 2011 to 2018. As a result, the ratio of private debt of a firm was found to have a negative relationship with the matching level. It indicates that the ratio of high-private debt of a firm reduces the matching level. These results were found to be consistent even using various methodologies (e.g., Prais–Winsten, and Newey–West). This study confirmed the negative sustainability of transparent accounting information when the ratio of borrowings in corporate financing is high. Our implications that different financing methods can have different effects on the sustainability of corporate transparent accounting information.

Keywords: corporate debt financing; matching level; sustainability of transparent accounting information (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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