Bank relationships and the value relevance of the income statement: Evidence from income-statement conservatism
- Authors
- Choi, Wooseok
- Issue Date
- 9월-2007
- Publisher
- BLACKWELL PUBLISHING
- Keywords
- bank relationships; debt financing; income statement conservatism; value relevance
- Citation
- JOURNAL OF BUSINESS FINANCE & ACCOUNTING, v.34, no.7-8, pp.1051 - 1072
- Indexed
- SCIE
SCOPUS
- Journal Title
- JOURNAL OF BUSINESS FINANCE & ACCOUNTING
- Volume
- 34
- Number
- 7-8
- Start Page
- 1051
- End Page
- 1072
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/125727
- DOI
- 10.1111/j.1468-5957.2007.02023.x
- ISSN
- 0306-686X
- Abstract
- This study examines the effects of a firm's debt financing decision on the informativeness of the income statement. This study specifically examines the association between a firm's bank dependence and the value relevance of the income statement by investigating the income-statement conservatism of firms with bank loans. Focusing on relatively small businesses, this study finds that income-statement conservatism, measured as timely loss recognition, is increasing in a firm's bank dependence. This study also finds that the value relevance of the income statement is increasing in a firm's bank dependence. The findings of this paper suggest that the usefulness of the income statement varies with a firm's bank dependence, indicating that the value relevance of the income statement is a function of a firm's debt financing decision. The findings further suggest that bank relationships affect the value relevance of the income statement through their influence on income-statement conservatism.
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Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
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