Abstract
We investigate whether implementation of IAS/IFRS affects the debt contracting. Prior studies have focused primarily on consequences of IAS/IFRS in equity markets, whilst debt financing has not received much attention. We therefore investigate whether companies using IAS/IFRS face more or less favourable debt contracting relative to companies which do not. Analysis of extant literature indicates that answer to this question is ambiguous because of the conflicting arguments presented there. Additionally, debt contracts have multiple contract terms (interest, amount, maturity, covenants, collateral) and the effect of accounting in such setting is not well researched. We conduct a comprehensive study analysing the association between IAS/IFRS adoption and price and non-price terms of bond issues in the UK. Preliminary results offer some support that adoption of IAS/IFRS affects debt contract terms. Findings are consistent with IAS/IFRS adoption reducing the cost of debt but maturity and secured stats are not associated with accounting standards.
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