Equity investments, Earnings Quality, and Cost of Debt
Date Issued
2009
Date
2009
Author(s)
Lin, Keng-Min
Abstract
This thesis would like to address whether the pricing of cost of debt on earnings quality would be affected by a firm’s equity investments. Self constructed measures in measuring parent-subsidiaries investment relationship and the percentage of investment in mainland China are applied to test the interaction relationship with earnings quality. Data from parent statements and consolidated statements are both obtained and form two parallel tests. The findings show that the negative relationship between earnings quality and cost of debt tend to be more pronounced in companies with more parent-subsidiaries investments and firms with relatively more investments in mainland China no matter in individual company level or consolidated level.
Subjects
Earnings quality
Accruals
Cost of capital
Cost of debt
Equity Investment
Consolidated statement
Information risk
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ntu-98-R96722013-1.pdf
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