Accounting and Debt Markets Four Pieces on the Role of Accounting Information in Debt Markets

Accounting and Debt Markets: Four Pieces on the Role of Accounting Information in Debt Markets provides novel and up-to-date evidence on the role of accounting information in debt markets

Companies and organisations worldwide rely heavily on debt markets for short, medium and long-term financing, and debt markets and financial intermediaries have significant effects on the real economy. Accounting information has various functions in debt markets, including inter alia, informing pricing decisions and credit ratings, determining the allocation of creditor control rights and establishing bank capital adequacy requirements. The chapters in this book provide illustrative discussion, analysis and evidence on the importance of accounting information in credit markets. The first of the four pieces reflects on how a conservative financial reporting system helps firms obtain debt funds and with better conditions, and why this is the case. The second examines the effects of accounting disclosure on credit ratings of private companies and shows that accounting information is useful for credit rating agencies. The two final pieces reflect on how banks should account for credit losses, and on how regulators are tackling this issue.

The chapters in this book were originally published as a special issue of Accounting and Business Research.

Introduction

Mark Clatworthy, Juan Manuel García Lara and Edward Lee

1. Conservatism in debt contracting: theory and empirical evidence

Fernando Peñalva and Alfred Wagenhofer

2. The impact of filing micro-entity accounts and the disclosure of reporting accountants on credit scores: an exploratory study

Michael J. Peel

3. Reflections on the development of the FASB’s and IASB’s expected-loss methods of accounting for credit losses

Noor Hashim, Weijia Li and John O'Hanlon

4. Bank loan loss accounting and its contracting effects: the new expected loss models

Begoña Giner and Araceli Mora

Mark Clatworthy is Professor of Accounting in the Department of Accounting and Finance at University of Bristol, UK.

Juan Manuel García Lara is Professor of Accounting at Universidad Carlos III de Madrid, Spain.

Edward Lee is Professor of Accounting and Finance at the Alliance Manchester Business School, University of Manchester, UK.