The Dynamics of Borrower Reputation Following Financial Misreporting

Sudheer Chava · Kershen Huang · Shane A. Johnson

60 citations0/0 files storedManagement Science

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Corporate Finance and Governance Credit Risk and Financial Regulations

Abstract

We study the dynamics of borrower reputation in bank loan markets following revelations of financial misreporting by the borrower. Misreporting firms pay greater loan spreads than matched firms for at least six years following revelation of the misreporting, and there is no evidence of a downward trend in the misreporting premium. Following revelation, misreporting firms are more likely to engage in various actions to potentially rebuild their reputations, but even firms that engage in multiple actions continue to pay greater loan spreads for at least six years. Our results suggest that misreporting causes long-lasting and costly reputation losses that firms find very difficult or prohibitively costly to restore. Data and the online appendix are available at https://doi.org/10.1287/mnsc.2017.2739 . This paper was accepted by Wei Jiang, finance.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 60 citations exist upstream.

References

1993Common risk factors in the returns on stocks and bonds 1974ON THE PRICING OF CORPORATE DEBT: THE RISK STRUCTURE OF INTEREST RATES*1991Earnings Management During Import Relief Investigations 1997Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?1995Detecting Earnings Management.1986Economic Forces and the Stock Market 2002The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors 1982Reputation and imperfect information

Cited by

2017Operational Risk and Reputation in Financial Institutions: Does Media Tone Make a Difference?2019Debt Covenants and Corporate Governance 2020Financial analysts' career concerns and the cost of private debt 2019A comparative study of entry mode options for E-commerce platforms and suppliers 2022Institutions and Corporate Reputation: Evidence from Public Debt Markets 2018The impact of corporate fraud on director‐interlocked firms: Evidence from bank loans

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.