Who monitors opaque borrowers? Debt specialisation, institutional ownership, and information opacity

Petya Platikanova, Kazbi Soonawalla

Producció científica: Article en revista indexadaArticleAvaluat per experts

5 Cites (Scopus)


In this study, we suggest that the level of information opaqueness determines the propensity of publicly listed firms to have debt financing from only a few debt types (i.e., debt specialisation). Using accruals quality as a proxy for information opaqueness, we find that the degree of debt specialisation is lower for firms with high-quality accruals. This result is consistent with the notion that information collection and monitoring costs are higher for firms that have higher informational opacity, explaining the tendency towards debt specialisation. We further argue that creditors need not monitor borrowers so closely when they are monitored by institutional owners. The empirical findings support this argument and show that firms with more stable institutional ownership are likely to have less specialised debt types. The empirical evidence is also consistent with the expectation that stable institutional ownership is likely to reduce the demand for monitoring over accruals management. Using S&P 500 membership as an exogenous event driving institutional ownership changes, we further document that debt specialisation is decreasing in accruals quality when institutional investors are expected to have an influence.

Idioma originalAnglès
Pàgines (de-a)1867-1904
Nombre de pàgines38
RevistaAccounting and Finance
Estat de la publicacióPublicada - 1 de juny 2020
Publicat externament


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