Business Commons^™

Accounting Information Risk And Credit Ratings, Douglas Ray Ayres

Doctoral Dissertations

Using a sample of U.S. firms, this study explores whether accounting information risk has an impact upon corporate credit ratings, a long term measure of the cost of debt. Theory suggests that accounting information risk could impact shorter term measures of the cost of debt, but is unclear as to whether it will have measurable effects upon the long term cost of debt. This study employs SFAS 157 level three fair value disclosures as a proxy for accounting information risk. The findings suggest higher levels of accounting information risk negatively impact credit ratings. This is supported by both levels and …