Financial statement comparability and corporate debt maturity

Abstract

This paper examines the relation between financial statement comparability and corporate debt maturity. We provide robust evidence that comparability has a negative effect on short-maturity debt. Consistent with the notion that comparability of financial statements plays an important role in aligning incentives within the firm, the inverse effect is more pronounced in cases where information asymmetry problems are more severe. Overall, our findings indicate that financial statement comparability can substitute for the use of short-term debt by serving as a corporate governance mechanism.