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Corporate Debt Financing and Earnings Quality

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  • Hashem Valipour
  • Mehdi Moradbeygi

Abstract

The objective of this research is to study the relationship between corporate debt financing and earnings quality and also to find the dominance of positive influence of debt or negative influence of debt on earnings quality. The research data were collected from 81 firms listed in Tehran Stock Exchange (TSE), during the years 2005-2009. For testing the hypotheses, multiple regression analysis was used. The results show that there is a negative and meaningful relationship between debt and earnings quality. Also with respect to introduction, in low level of debt, positive influence of debt dominant to negative influence of debt, then the results show that there is a positive and meaningful relation between debt and earnings quality in the firm With low debt. Moreover, with respect to introduction, in high level of debt, negative influence of debt dominant to positive influence of debt, then the results show, there is a negative and meaningful relation between debt and earnings quality.

Suggested Citation

  • Hashem Valipour & Mehdi Moradbeygi, 2011. "Corporate Debt Financing and Earnings Quality," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 1(3), pages 1-10.
    • Handle: RePEc:spt:apfiba:v:1:y:2011:i:3:f:1_3_10
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    Cited by:

    1. Nguyen Thi Thanh Phuong & Dang Ngoc Hung & Vu Thi Thuy Van & Ngo Thanh Xuan, 2020. "Effect of Debt Structure on Earnings Quality of Energy Businesses in Vietnam," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 396-401.
    2. Lassaad Ben Mahjoub & Halioui Khamoussi, 2013. "Environmental and Social Policy and Earning Persistence," Business Strategy and the Environment, Wiley Blackwell, vol. 22(3), pages 159-172, March.
    3. Persakis, Anthony & Iatridis, George Emmanuel, 2015. "Cost of capital, audit and earnings quality under financial crisis: A global empirical investigation," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 38(C), pages 3-24.
    4. Cláudia Pereira & Albertina Monteiro & Diana Silva & Armindo Lima, 2023. "Do the Levels of Environmental Sustainability Disclosure and Indebtness Affect the Quality of Earnings?," Sustainability, MDPI, vol. 15(4), pages 1-13, February.
    5. Ferry Aditya, 2016. "Corporate Social Responsibility (CSR) Performance and Accrual Quality: Case study on Firms Listed on Indonesia Stock Exchange (IDX)," Business and Economic Research, Macrothink Institute, vol. 6(2), pages 51-64, December.
    6. Vo Thi Van Khanh & Dang Ngoc Hung, 2020. "Impact of Earnings Quality on the Debt Maturity: The Case of Vietnam," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(1), pages 1-12, January.
    7. Persakis, Anthony & Iatridis, George Emmanuel, 2017. "The joint effect of investor protection, IFRS and earnings quality on cost of capital: An international study," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 1-29.
    8. Olumide A. Olowokure & Muhammad Tanko & Terzungwe Nyor, 2016. "Firm Structural Characteristics and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria," International Business Research, Canadian Center of Science and Education, vol. 9(1), pages 106-122, January.

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