Price convexity, debt-related agency costs, and timely loss recognition Peter D. Easton Center for Accounting Research and Education University of Notre Dame Indiana, IN 46556 peaston@nd.edu Valeri Nikolaev The University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 (773) 834 4116 valeri.nikolaev@chicagogsb.edu Laurence van Lent Tilburg University CentER and Department of Accountancy PO Box 90153, 5000 LE Tilburg, The Netherlands +31 13 466 8288 vanlent@uvt.nl First draft: February 2007 This draft: January 2009 We appreciate helpful comments from seminar participants at the 2008 Stanford Summer Camp, Tilburg University, the University of Notre Dame, the University of Colorado at Denver, National University of Singapore, Northwestern University, and from Ray Ball, Brad Badertscher, Mary Barth, Bill Beaver, Jeremy Bertomeu, Miao Bin, Jan Bouwens, Jeff Burks, Craig Chapman, Ron Dye, Pengjie Gao, Joseph Gerakos, Stephan Hollander, Lisa Kutcher, Christian Leuz, Tom Lys, Stanimir Markov, Jim Morris, Wieteke Numan, Jim Ohlson, Steve Rock, Tjomme Rusticus, Douglas Skinner, Mark Soliman, Srini Srinivasan, Anup Srivastava, Jayanthi Sunder, Shyam Sunder, Tom Stober, Ann Vanstraelen, Linda Vincent, Beverly Walther, Richard Wang, and Andrew Yim.