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| Author: | Beatty, A. Weber, J. |
| Title: | The Effects of Debt Contracting on Voluntary Accounting Method Changes |
| Journal: | Accounting Review
2003 : JAN, VOL. 78:1, p. 119-142 |
| Index terms: | ACCOUNTING DEBT FINANCING PRICING DIVIDENDS |
| Language: | eng |
| Abstract: | This study examines whether the provisions of a firm's bank debt contracts affect its accounting choices. Starting with a sample of firms who have bank debt and who also voluntarily changed accounting methods, the authors investigate whether the likelihood that the change in accounting method increased (rather than decreased) the borrower's income depends on (1) whether the change in accounting method affects the bank debt contract cal culations, (2) the expected costs of violating the bank debt covenants, (3) whether performance pricing provisions affect the interest rate on the loan, and (4) whether the bank debt contract contains accounting-based dividend restrictions. |
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