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In this paper, I examine the ex post and ex ante benefits of conservatism to lenders and borrowers in the debt contracting process. First, I argue that conservatism benefits lenders ex post through a timely signal of default risk in the form of accelerated covenant violations by more conservative borrowers. I present evidence that the likelihood of a covenant violation following a negative shock increases in borrower conservatism. Second, I argue that conservatism benefits borrowers ex ante through lower initial interest rates. I provide both insample and out-of-sample evidence that lenders offer lower interest rates to more conservative borrowers. The result is robust to controlling for a series of other earnings attributes. AcknowledgementI am deeply indebted to S.P. Kothari, chair of my thesis committee, for his guidance, advice, and encouragement. S.P. is the best mentor one can ever hope for, and his influence goes far beyond research. He spent his valuable time reading and revising numerous drafts of this paper. I attribute my achievements so far mostly to him.I am grateful to Joseph Weber, member of my thesis committee, for supervising me closely and responsibly. Joe played a critical role in the idea formation process and in the idea implementation. He is good at dealing with both the big question and the nitty-gritty detail of each empirical step. I have had the pleasure to work under his supervision and also to work with him on other projects.I am thankful to Peter Wysocki, member of my thesis committee, for teaching me how to think broadly. Every comment from Peter is insightful. He taught me how to think beyond the physical paper so as not to confine myself to a small niche. Peter communicates his points in such a concise yet clear way, and his comments and suggestions improved this paper greatly. I wish I could articulate as well as he does.I also want to thank other faculty members, Jennifer Altamuro, Richard Frankel, Peter Joos, George Plesko, and Sugata Roychowdhury, for helpful comments and inspiring discussions.My two years in the Ph.D. program at Kellogg provided me with solid training in economics and econometrics. I was lucky that I was first exposed to accounting research in the seminars taught by Ronald Dye, Robert Magee, Sri Sridharan, and Beverly Walther.I receive a lot of valuable comments from the workshop participants at Boston University, Georgetown University, Southern Methodist University, University of British Columbia, University of Minnesota, University of Pennsylvania, and University of Southern California. I am grateful that the professors at these universities thought enough of me to give me the opportunity to interview to be a potential colleague. M]Iy fellow students are an important part of the whole process of getting a Ph.D. We share the joy and the pain. We also share the limited office space that makes us close to each other. I want to thank Gloria (Xiaohui) Liu and Daniel Cohen, who graduated from Northwestern last year; they were there with me in the first t...

In this paper, I examine the ex post and ex ante benefits of conservatism to lenders and borrowers in the debt contracting process. First, I argue that conservatism benefits lenders ex post through a timely signal of default risk in the form of accelerated covenant violations by more conservative borrowers. I present evidence that the likelihood of a covenant violation following a negative shock increases in borrower conservatism. Second, I argue that conservatism benefits borrowers ex ante through lower initial interest rates. I provide both insample and out-of-sample evidence that lenders offer lower interest rates to more conservative borrowers. The result is robust to controlling for a series of other earnings attributes. AcknowledgementI am deeply indebted to S.P. Kothari, chair of my thesis committee, for his guidance, advice, and encouragement. S.P. is the best mentor one can ever hope for, and his influence goes far beyond research. He spent his valuable time reading and revising numerous drafts of this paper. I attribute my achievements so far mostly to him.I am grateful to Joseph Weber, member of my thesis committee, for supervising me closely and responsibly. Joe played a critical role in the idea formation process and in the idea implementation. He is good at dealing with both the big question and the nitty-gritty detail of each empirical step. I have had the pleasure to work under his supervision and also to work with him on other projects.I am thankful to Peter Wysocki, member of my thesis committee, for teaching me how to think broadly. Every comment from Peter is insightful. He taught me how to think beyond the physical paper so as not to confine myself to a small niche. Peter communicates his points in such a concise yet clear way, and his comments and suggestions improved this paper greatly. I wish I could articulate as well as he does.I also want to thank other faculty members, Jennifer Altamuro, Richard Frankel, Peter Joos, George Plesko, and Sugata Roychowdhury, for helpful comments and inspiring discussions.My two years in the Ph.D. program at Kellogg provided me with solid training in economics and econometrics. I was lucky that I was first exposed to accounting research in the seminars taught by Ronald Dye, Robert Magee, Sri Sridharan, and Beverly Walther.I receive a lot of valuable comments from the workshop participants at Boston University, Georgetown University, Southern Methodist University, University of British Columbia, University of Minnesota, University of Pennsylvania, and University of Southern California. I am grateful that the professors at these universities thought enough of me to give me the opportunity to interview to be a potential colleague. M]Iy fellow students are an important part of the whole process of getting a Ph.D. We share the joy and the pain. We also share the limited office space that makes us close to each other. I want to thank Gloria (Xiaohui) Liu and Daniel Cohen, who graduated from Northwestern last year; they were there with me in the first t...

Progression to severe disease is a difficult problem in treating coronavirus disease 2019 . The purpose of this study is to explore changes in markers of severe disease in COVID-19 patients. Sixty-nine severe COVID-19 patients were included. Patients with severe disease showed significant lymphocytopenia. Elevated level of lactate dehydrogenase (LDH), C-reactive protein (CRP), ferritin, and D-dimer was found in most severe cases. Baseline interleukin-6 (IL-6) was found to be associated with COVID-19 severity. Indeed, the significant increase of baseline IL-6 was positively correlated with the maximal body temperature during hospitalization and with the increased baseline of CRP, LDH, ferritin, and D-dimer. High baseline IL-6 was also associated with more progressed chest computed tomography (CT) findings. Significant decrease in IL-6 and improved CT assessment was found in patients during recovery, while IL-6 was further increased in exacerbated patients. Collectively, our results suggest that the dynamic change in IL-6 can be used as a marker for disease monitoring in patients with severe COVID-19.

We study the stock and audit market effects associated with a widely publicized accounting scandal involving a public company (ComROAD AG) and a large, reputable audit firm (KPMG) in a country (Germany) that has long provided auditors with substantial protection from shareholder legal liability. We use this event to study whether an auditor's reputation helps to ensure audit quality, a rationale for which recent literature and events provide scant support. Given the absence of a strong insurance rationale for audit quality, Germany permits a relatively clean test of whether auditor reputation matters. We find that KPMG's clients sustain negative abnormal returns of 3% at events pertaining to ComROAD, and that these returns are more negative for companies that are likely to have higher demands for audit quality. We also find an increase in the number of clients that drop KPMG in the year of the ComROAD scandal (mostly smaller, recently public companies that are similar to ComROAD). Overall, our results provide support for the reputation rationale for audit quality.

Background The outbreak of coronavirus disease 2019 in Wuhan City, China has spreads rapidly since December, 2019. Most patients show mild symptoms, but some of them develop into severe disease. There is currently no specific medication. The purpose of this study is to explore changes of markers in peripheral All rights reserved. No reuse allowed without permission. author/funder, who has granted medRxiv a license to display the preprint in perpetuity.

A large auditing literature concludes that Big N auditors provide higher audit quality than non-Big N auditors. An unresolved question, however, is whether self-selection drives this "Big N effect." Recently, a high profile study concludes that Propensity Score Matching (PSM) on client characteristics causes the Big N effect to disappear. We conjecture that this finding may be affected by PSM's sensitivity to its design choices or by the particular set of audit quality measures used in the analysis. To investigate, we examine how random combinations of three basic PSM design choices influence the relation between Big N auditors and several of the most commonly used measures of audit quality. We find that the results are sensitive to the design choices as well as the audit quality measures, with the majority of models finding a Big N effect. Importantly, we find similar results when we restrict our analysis to PSM design choices that lead to high quality matches. The Big N effect is also found using an alternative matching procedure, Coarsened Exact Matching. Overall, our findings suggest that it is premature to conclude that client characteristics drive the Big N effect.