Ph.D. Mellado-Cid, Cristhian

We examine real activities manipulation by firms prior to their debt issuances and how such manipulation activities affect bond yield spreads. We find that bond-issuing firms increase their real activities manipulation in the five quarters leading to a bond issuance. We document an inverse association between yield spread and pre-issue real activities manipulation,i.e., firms engaged in abnormally high levels of real activities manipulation are associated with subsequent lower cost of debt.