ACCOUNTING

We study the effect of the adoption of antitakeover legislation at the state level in the 1980s, on firm R&D expenditure. These laws limit hostile takeovers and hence effectively increase managerial discretion. Prior studies, using adoption of one or a few antitakeover measures report inconsistent evidence on the relation between antitakeover provisions and R&D expenditure. We contribute to this area of inquiry by examining the effect of state-level adoption of antitakeover laws during the 1980’s on firm-level R&D expenditure. Adopting a difference-in-difference methodology, we fail to find a significant change in R&D expenditure following the adoption of state antitakeover laws. Since state antitakeover laws are exogenous to managerial discretion, our results suggest that prior evidence documenting a significant association between antitakeover protection and R&D could be attributable to unobservable variables correlated with both antitakeover protection and R&D.

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.