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Does the Tone of Management Discussion and Analysis Associate with Corporate Debt Expansion? Evidence from A-share Listed Companies

Author

Listed:
  • Qingyuan Wu

    (School of Economics and Management, Hanshan Normal University)

  • Ke Zheng

    (Hanshan Normal University)

  • Xue Wang

    (Department of Economics, Emory University
    Institute of Chinese Financial Studies, Southwestern University of Finance and Economics)

Abstract

Analyzing panel data from China's A-share non-financial firms, this study detects a robust correlation between the affirmative tone in annual MD&A sections and corporate debt growth from 2007 to 2021. The positive tone's influence on debt is both immediate and moderated by profitability, operational risk, and internal controls, without apparent collusion with earnings management. Firms with superior resources exhibit reduced reliance on MD&A tone for debt financing, yet those with moderate resources strategically employ it to augment their debt appeal, providing strategic debt financing insights.

Suggested Citation

  • Qingyuan Wu & Ke Zheng & Xue Wang, 2024. "Does the Tone of Management Discussion and Analysis Associate with Corporate Debt Expansion? Evidence from A-share Listed Companies," Annals of Economics and Finance, Society for AEF, vol. 25(2), pages 705-739, November.
    • Handle: RePEc:cuf:journl:y:2024:v:25:i:2:wuzhengwang
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    More about this item

    Keywords

    MD&A tone; Corporate debt expansion; Text information; Earnings management;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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