In this paper, we offer a new theory for the economic demand of accounting conservatism, which emphasizes the signaling … role of conservatism in a debt market with asymmetric information. In our model, accounting conservatism serves as a signal … signing the debt contract. In developing this signaling theory of conservatism, our paper achieves two major outcomes: (1) we …

incentives to monitor borrowers. Contracting theory predicts that lenders demand conservatism, in particular asymmetric …

on a range of accounting variables and what determines their selective use. Using a model of firm investment where firms …

In this paper, we investigate the effect of accounting biases on firms' financing decisions and the role of accounting …-biased accounting system performs better than a neutral accounting system, and a more downward bias helps mitigate both investment and … financing inefficiency; while for industries with generally high-profit prospects, an upward-biased accounting system is better …

the exchange rate. We provide extensive empirical evidence for this signalling channel using micro data for firms in …

another branch of the same bank. We show the effect depends directly on the relative balance between the hard accounting …

We examine the information role of accounting disclosures on warranties, utilizing a database that became available due …