Sonia Wasan
Assistant Professor, Northern Kentucky University, USA.
Kenneth N. Daniels
Professor, Virginia Commonwealth University, USA.
Jayaraman Vijaykumar
Professor, Virginia Commonwealth University, USA.Accruals, Accrual Quality, and Borrowing Costs in
the Market for Syndicated Loans
We investigate the role of accrual quality in influencing borrowing
costs in the syndicated loan market. Using a large sample of syndicated
loans, and controlling for issue, and issuer characteristics that could
influence borrowing costs, we show that lower accrual quality can
exacerbate conditions of information asymmetry and lead to higher
borrowing costs. Our results suggest that this may be more
predominant in loans with multiple-arrangers. Additionally, we also
show that accrual quality influences the syndicate structure and
whether a loan has a single- or multiple-arrangers.