Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5107732 | Journal of Accounting and Public Policy | 2016 | 19 Pages |
Abstract
Using a large sample of U.S. firms, this study explores whether a firm's holdings of SFAS 157 level three fair value assets (level three assets) have an impact upon corporate credit ratings. The findings suggest higher holdings of level three assets negatively impact credit ratings. Both levels and changes analyses support this result. In additional cross-sectional analysis, this relation becomes stronger for firms with greater financial leverage, which suggests that a primary determinant of credit risk amplifies the documented main effect. Furthermore, higher magnitudes of level three assets are associated with an economically meaningful increase to corporate bond spreads.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Douglas R. Ayres,