Does accounting quality mitigate risk shifting?
Name
624959607-MIT.pdf
Description
Full printable version
Size
9.32 MB
Format
Adobe PDF
Checksum (MD5)
8de2135943465482c1309d430afa1562
Author(s)
Loktionov, Yuri V
Advisor(s)
S.P. Kothari and Joseph P. Weber.
Date Issued
2009
Publisher
Massachusetts Institute of Technology
Abstract
This study examines the effect of financial reporting quality on risk shifting, an investment distortion that is caused by shareholders' incentives to engage in high-risk projects that are detrimental to debt holders. I use asymmetric timeliness to proxy for a dimension of accounting quality that is particularly useful to debt holders. Asymmetric timeliness is expected to improve debt holders' ability to effectively monitor the management's actions and to discipline the managers when necessary. I predict that the effect of accounting quality on risk shifting will be stronger in firms with poor information environment, in distressed firms, in cash-rich firm, and after the adoption of the Sarbanes-Oxley Act of 2002. I also expect this effect to vary based on the firm's source of debt. The results are consistent with the predictions and robust to alternative measures of risk shifting, accounting quality, distress risk, and various control variables.
Description
Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2009.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 56-62).
Subjects
Sloan School of Management.
MIT Department
Sloan School of Management
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