Martin, Xiumin; Roychowdhury, Sugata - In: Journal of Accounting and Economics 59 (2015) 1, pp. 80-104
This paper investigates whether the initiation of trading in credit default swaps (CDSs) on a borrowing firm׳s outstanding debt is associated with a decline in that firm׳s reporting conservatism. CDS investments can modify lenders׳ payoffs on their loan portfolios by providing insurance on...