Financial statement comparability and debt choice

This paper investigates whether financial statement comparability influences corporate debt choice (i.e., the use of public and bank debt). Using a panel of U.S.-listed companies from 2001 to 2018, our sample comprises 14,872 firm-year observations representing 2,412 firms. We find that firms with higher financial statement comparability rely more on public debt financing than on bank debt. This finding remains robust after conducting a series of endogeneity tests and robustness analyses. In the cross-sectional heterogeneity analyses, we observe that our documented relationship between comparability and public debt financing is more conspicuous for firms facing greater information asymmetries and higher financing constraints. Overall, our study suggests that financial statement comparability has important implications for corporate debt choice.