Theme: The effects of PCAOB international inspections on debt concentration

Lecturer: Yangxin Yu

Time: 2022.06.02 10:00

Site: Tecent meeting 943 369 105

Abstract:

This study investigates whether and how the public audit oversight, Public Company Accounting Oversight Board (PCAOB) international inspection, affects the firm’s debt concentration level. Based on theoretical and empirical evidence related to debt structure, the downside of a dispersed debt structure mainly comes from the costly creditor coordination among multiple debt holders. We find that firms with PCAOB-inspected auditors have a less concentrated debt structure after the public disclosure of the inspection report because PCAOB oversight helps increase the probability of successful coordination and decrease the costs from a coordination failure. Further, the relation is stronger for firms with less sound information environment, higher default risk, lower liquidation value, greater debt financing capacity, and in countries with weaker legal institutions. Our findings help identify the role of audit regulation on determining firm’s debt structure by decreasing the expected bankruptcy costs, which deepens the understanding of the heterogeneous use of debt in global firms, the important characteristic in capital structure.

Introduction to the lecturer:

Yangxin Yu is an professor of Accounting at the City University of Hong Kong Business School. He received his Ph.D. in Accounting from the Hong Kong University of Science and Technology in 2011, and holds a teaching position at the School of Accountancy of the Australian National University. He joined City University of Hong Kong in 2014. Professor Yu's research areas include corporate disclosure, executive compensation, and corporate social responsibility. His research results have been published in the Journal of Accounting and Economics, The Accounting Review, Journal of Financial and Quantitative Analysis, Strategic Management Journal and other top international academic journals in accounting, finance and management.

https://www.cb.cityu.edu.hk/staff/yangxiyu/