We investigate whether companies strategically change accounting estimates to manipulate earnings, as some claim (“opportunism” hypothesis), or whether these modifications represent changes in the underlying fundamentals of financially troubled or risky companies updating their priors about...

A significant volume of long-term debt was refinanced by corporate America in the early 1990s. We argue that a majority of the refinancing was undertaken to improve the firm's cash flow performance. Firms replacing high-coupon long-term debt with low-coupon debt were able to increase their...