Abstract：Analyzing panel data from China’s A-share non-financial firms, this study detects a robust correlation between the affirmative tone in annual MD&A sections and corporate debt growth from 2007 to 2021. The positive tone’s influence on debt is both immediate and moderated by profitability, operational risk, and internal controls, without apparent collusion with earnings management. Firms with superior resources exhibit reduced reliance on MD&A tone for debt financing, yet those with moderate resources strategically employ it to augment their debt appeal, providing strategic debt financing insights.

Key Words: MD&A tone; Corporate debt expansion; Text information; Earnings management.

http://www.aeconf.com/Articles/Nov2024/aef250211.pdf