Debt capital markets and financial reporting

Aleszczyk, Aleksander A (2019) Debt capital markets and financial reporting. Doctoral thesis, University of London: London Business School.

Abstract

My thesis focuses on the role of disclosure for debt capital markets. In Chapter 1, I explore the commercial paper (CP) market, the largest source of public short-term borrowings for US non-financial firms, to examine whether firms use short-term debt to manage reported leverage ratios. I document that firms structure CP to mature immediately prior to a fiscal quarter-end. These maturities result in a 7% (2 pp) decline in leverage ratios at quarterends, relative to average within-quarter levels. I believe this is an important topic, as it brings new insights to CP issuing firms, credit rating agencies and the US Securities and Exchange Commission. Chapter 2, a joint work with Aytekin Ertan, Emmanuel De George and Florin Vasvari, investigates the extent to which fair value adjustments (FVAs) arising from business combinations provide information about available collateral. We show that FVAs, especially those reported on the target?s tangible assets, are associated with substantial new debt issuance at more favorable lending terms by the combined firm after the acquisition. In Chapter 3, I examine the disclosures of large equity short positions in the European Union, and provide evidence that bond market reactions to negative earnings surprises are attenuated after a short sales position is disclosed, especially when the discloser is a reputable short seller.