Deno, Snjezana (2018). Accounting Information in Debt Contracting. PhD thesis, Universität zu Köln.


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This thesis includes empirical studies, which analyze the role of accounting information in debt contracting of German private firms. In the first part of the thesis, we examine whether banks require lower cost of debt from private firms with better accruals quality. The findings show that better accruals quality is associated with lower cost of debt, which indicates that banks incorporate accruals quality in assessing firms’ risk. Then, we document that firms with higher accruals quality receive a lower reduction in the cost of debt charge the larger the amount they borrow from the main bank. This suggests that banks complement accounting information with additional private information channels if the loan amount warrants more scrutiny. Finally, we find that better accruals quality firms get a larger reduction in cost of debt the longer their relation to the same main bank. The explanation could be that repeated interactions with the same firm enables banks to interpret accounting information better. The second part of the thesis exhibits the effect of private accounting information becoming public on firms’ access to bank debt. The inside lender (i.e., housebank) can monitor the firm more effectively than an outside (i.e., potential) lender, as it has access to its financial statements and additional private information. Employing a regulatory change, which increased enforcement and first established fines for firms that do not publicly disclose their financial statements, we hypothesize and find that the information asymmetry between inside and outside lenders decreases, and firms’ access to bank debt increases. Thus, our study shows that mandatory public disclosure results in increased competition between lenders. As such, it decreases hold-up problems for private firms. Results of this quasi-natural experiment, and our novel dataset in a non-voluntary private firm setting, contributes to the discussion revolving around the nexus between private and public information in debt contracting.

Item Type: Thesis (PhD thesis)
CreatorsEmailORCIDORCID Put Code
Deno, Snjezanasnjezana.deno@gmail.comUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-80242
Date: 25 January 2018
Language: English
Faculty: Faculty of Management, Economy and Social Sciences
Divisions: Faculty of Management, Economics and Social Sciences > Business Administration > Accounting and Taxation > Professorship for Business Administration and Management Accounting
Subjects: General statistics
Management and auxiliary services
Uncontrolled Keywords:
accruals quality; relationship lending; cost of debt; mandatory public disclosure; access to bank debt; private firmsEnglish
Date of oral exam: 20 December 2017
NameAcademic Title
Homburg, CarstenUniv.-Prof. Dr.
Kuhner, ChristophUniv.-Prof. Dr.
Refereed: Yes


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