The strategic model for insured bond of firm is a new model which is developed based on options pricing model and game theory. When firm’s bond was insured against bankruptcy, some interesting results about endogenou...The strategic model for insured bond of firm is a new model which is developed based on options pricing model and game theory. When firm’s bond was insured against bankruptcy, some interesting results about endogenous bankruptcy and optimal capital structure are obtained.展开更多
In this study, we investigate the association between financial reporting quality and a firm＇s deviation from its optimal capital structure. We find that a firm＇s deviation from its optimal capital structure is decr...In this study, we investigate the association between financial reporting quality and a firm＇s deviation from its optimal capital structure. We find that a firm＇s deviation from its optimal capital structure is decreasing in financial reporting quality. The results suggest that high-quality financial reporting helps to reduce a firm＇s deviation from its optimal capital structure. In addition, we document that the relationship is intensified in non-SOEs, in which financial reporting quality plays a more crucial role. Furthermore, we find that bank connections diminish the role of financial reporting quality in optimal capital structure. Our results hold when we control for potential endogeneity in financial reporting quality and capital structure decisions. Our study contributes to both financial reporting quality and capital structure literature. We also contribute to the literature on informal contracts in organizational decision-making.展开更多
基金Financial support from the National Natural Science Foundation of China (70271069).
文摘The strategic model for insured bond of firm is a new model which is developed based on options pricing model and game theory. When firm’s bond was insured against bankruptcy, some interesting results about endogenous bankruptcy and optimal capital structure are obtained.
文摘In this study, we investigate the association between financial reporting quality and a firm＇s deviation from its optimal capital structure. We find that a firm＇s deviation from its optimal capital structure is decreasing in financial reporting quality. The results suggest that high-quality financial reporting helps to reduce a firm＇s deviation from its optimal capital structure. In addition, we document that the relationship is intensified in non-SOEs, in which financial reporting quality plays a more crucial role. Furthermore, we find that bank connections diminish the role of financial reporting quality in optimal capital structure. Our results hold when we control for potential endogeneity in financial reporting quality and capital structure decisions. Our study contributes to both financial reporting quality and capital structure literature. We also contribute to the literature on informal contracts in organizational decision-making.
