I examine the relationship between contracting parties' familiarity with one another's accounting information and the terms and structure of debt contracts. I use the differences in generally accepted accounting principles (GAAP) among contracting parties domiciled in different countries as a proxy for how familiar a lending bank will be with a borrower's accounting information. I find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a higher credit spread and higher fees. I also find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a more concentrated loan syndicate, suggesting a closer monitoring relationship between the borrower and the lender. Finally, I find that when there is a larger difference between the GAAP of the lender and the GAAP of the borrower, banks rely less on financial covenants as a contracting tool. Moreover, banks tend to alter the types of covenants they write, relying more on capital-based financial covenants and less on earnings-based covenants. My results are consistent with banks experiencing information problems when contracting with parties whose accounting information they find to be unfamiliar. These results provide new evidence on the importance of financial reporting for debt contracting.
","abstract_html":"<p>I examine the relationship between contracting parties' familiarity with one another's accounting information and the terms and structure of debt contracts. I use the differences in generally accepted accounting principles (GAAP) among contracting parties domiciled in different countries as a proxy for how familiar a lending bank will be with a borrower's accounting information. I find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a higher credit spread and higher fees. I also find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a more concentrated loan syndicate, suggesting a closer monitoring relationship between the borrower and the lender. Finally, I find that when there is a larger difference between the GAAP of the lender and the GAAP of the borrower, banks rely less on financial covenants as a contracting tool. Moreover, banks tend to alter the types of covenants they write, relying more on capital-based financial covenants and less on earnings-based covenants. My results are consistent with banks experiencing information problems when contracting with parties whose accounting information they find to be unfamiliar. These results provide new evidence on the importance of financial reporting for debt contracting. </p>","abstract_has_math":false,"creators":["Brown, Anna B."],"institution":"The Graduate School and University Center of The City University of New York","degree_name":"Doctor of Philosophy","degree_level":"Doctoral","degree_discipline":"Business","degree_department":null,"school":null,"contributors":[],"advisors":["Donal Byard"],"committee_chairs":[],"committee_members":[],"year":2014,"date_issued":"2014-02-01T08:00:00Z","date_published":"2014-02-01T08:00:00Z","updated_at":"2026-07-24T01:59:54Z","subjects":["Accounting","Debt Contracting","International Accounting Standards"],"languages":[],"rights":[],"rights_urls":[],"identifier_entries":[]},"links":{"outbound_url":"https://academicworks.cuny.edu/gc_etds/19","outbound_label":"Repository record","outbound_source":"dc:identifier"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor.advisor","label":"Advisor","values":["Donal Byard"]},{"key":"dc:creator","label":"Author","values":["Brown, Anna B."]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date.available","label":"Dc Date Available","values":["2001-01-01T08:00:00Z"]},{"key":"thesis:degree_discipline","label":"Discipline","values":["Business"]},{"key":"thesis:degree_level","label":"Degree Level","values":["Doctoral"]},{"key":"thesis:degree_name","label":"Degree Name","values":["Doctor of Philosophy"]},{"key":"thesis:institution_name","label":"Thesis Institution Name","values":["The Graduate School and University Center of The City University of New York"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Accounting","Debt Contracting","International Accounting Standards"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier","label":"Identifier","values":["https://academicworks.cuny.edu/gc_etds/19"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description.abstract","label":"Abstract","values":["I examine the relationship between contracting parties' familiarity with one another's accounting information and the terms and structure of debt contracts. I use the differences in generally accepted accounting principles (GAAP) among contracting parties domiciled in different countries as a proxy for how familiar a lending bank will be with a borrower's accounting information. I find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a higher credit spread and higher fees. I also find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a more concentrated loan syndicate, suggesting a closer monitoring relationship between the borrower and the lender. Finally, I find that when there is a larger difference between the GAAP of the lender and the GAAP of the borrower, banks rely less on financial covenants as a contracting tool. Moreover, banks tend to alter the types of covenants they write, relying more on capital-based financial covenants and less on earnings-based covenants. My results are consistent with banks experiencing information problems when contracting with parties whose accounting information they find to be unfamiliar. These results provide new evidence on the importance of financial reporting for debt contracting.
"]},{"key":"dc:title","label":"Title","values":["Financial Reporting Differences and Debt Contracting"]}]}],"canonical_facts":{"dc:contributor.advisor":["Donal Byard"],"dc:creator":["Brown, Anna B."],"dc:date.available":["2001-01-01T08:00:00Z"],"dc:description.abstract":["I examine the relationship between contracting parties' familiarity with one another's accounting information and the terms and structure of debt contracts. I use the differences in generally accepted accounting principles (GAAP) among contracting parties domiciled in different countries as a proxy for how familiar a lending bank will be with a borrower's accounting information. I find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a higher credit spread and higher fees. I also find that a larger difference between the GAAP of the lender and the GAAP of the borrower is associated with a more concentrated loan syndicate, suggesting a closer monitoring relationship between the borrower and the lender. Finally, I find that when there is a larger difference between the GAAP of the lender and the GAAP of the borrower, banks rely less on financial covenants as a contracting tool. Moreover, banks tend to alter the types of covenants they write, relying more on capital-based financial covenants and less on earnings-based covenants. My results are consistent with banks experiencing information problems when contracting with parties whose accounting information they find to be unfamiliar. These results provide new evidence on the importance of financial reporting for debt contracting.
"],"dc:identifier":["https://academicworks.cuny.edu/gc_etds/19"],"dc:subject":["Accounting","Debt Contracting","International Accounting Standards"],"dc:title":["Financial Reporting Differences and Debt Contracting"],"thesis:degree_discipline":["Business"],"thesis:degree_level":["Doctoral"],"thesis:degree_name":["Doctor of Philosophy"],"thesis:institution_name":["The Graduate School and University Center of The City University of New York"]},"updated_at":"2026-07-24T01:59:54Z"}