Antitakeover legislation and accounting conservatism: New evidence

Antitakeover legislation and accounting conservatism: New evidence

We examine the effect of second-generation state antitakeover laws (ATLs) on accounting conservatism. We adopt a novel methodology that corrects for selection bias resulting from firms’ endogenous incorporation decision. Focusing on the period from when these ATLs became constitutional, we find a ne...

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Veröffentlicht in:Journal of accounting and public policy 2017-03, Vol.36 (2), p.119-140
Hauptverfasser: Cheng, Shijun, Duru, Augustine, Zhao, Yijiang
Format: Artikel
Sprache:eng
Schlagworte:
Accounting conservatism
Accounting procedures
Agency costs of debt
Antitrust laws
Bias
Conservatism
Debt
Debtholder demand
Endogenous
Incorporation
Legislation
Second generation
Selection bias
State antitakeover laws
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Zusammenfassung:We examine the effect of second-generation state antitakeover laws (ATLs) on accounting conservatism. We adopt a novel methodology that corrects for selection bias resulting from firms’ endogenous incorporation decision. Focusing on the period from when these ATLs became constitutional, we find a negative association between ATLs and conservatism. Our results suggest that ATLs decrease debtholder demand for conservatism by reducing agency costs of debt.
ISSN:0278-4254
1873-2070
DOI:10.1016/j.jaccpubpol.2017.02.003