The role of financial reporting in debt contracting and in stewardship
Journal
Accounting and Business Research
Subject
Accounting
Publishing details
Authors / Editors
Shivakumar L
Biographies
Publication Year
2013
Abstract
In this paper, I review the role that financial accounting plays in contracts aimed at mitigating agency problems between shareholders and managers and between shareholders and debtholders. The paper discusses the reasons why and how financial accounting numbers are used in debt and stewardship contracting. It further considers the effects of conservatism and fair-value accounting on the relevance of financial reports for contracting. The paper provides some key takeaways from academic literature for accounting practice and regulation.
Keywords
Financial reporting; Contracting; Stewardship; Debt covenants; Fair-value accounting; Conservatism
Available on ECCH
No
