Accounting Papers

Document Type

Journal Article

Date of this Version

8-2008

Publication Source

Journal of Accounting and Economics

Volume

45

Issue

2-3

Start Page

175

Last Page

180

DOI

10.1016/j.jacceco.2008.05.001

Abstract

Considerable research has documented the role of debt covenants and conservative financial accounting in addressing agency conflicts between lenders and borrowers. Beatty, A., Weber, J., and Yu, J. [2008. Conservatism and debt. Journal of Accounting and Economics, forthcoming] document interesting, but mixed, findings on the relation between debt covenants and conservative accounting, and the extent to which the two contracting mechanisms act as substitutes or complements. In this paper, I discuss the economic roles of financial reporting, debt covenants, and conservatism within the debt contracting environment, and attempt to fit BWY's findings within this context.

Copyright/Permission Statement

© 2008. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

financial reporting, conservatism, debt contracts, debt covenants, agency costs of debt

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Date Posted: 27 November 2017

This document has been peer reviewed.