We examine security issuance in restated periods by firms that misreport financial statements and find that only a small percent of such firms issues securities in the restated period. Investors are misled by mistakes made by firms issuing equity more so than other restating firms at the initial...

I use an accounting reform to assess the agency cost of debt in diversified firms. Firms that switch from single-to-multisegment following the reform suffer a 12% increase in the bond spread than their standalone peers. Consistent with lenders anticipating underinvestment and asset substitution...

Prior evidence shows a reduction in leverage after covenant violations, but we do not know whether covenants affect leverage before they are violated. In this study, we use an exogenous accounting-based shock to debt covenants that relaxed covenant tightness (SFAS 160) and examine whether...