Creditor control rights and firm investment policy

Journal of Financial Economics

Volumn 92, Issue 3, 2009, Pages 400-420

  Nini, Greg ^a   Smith, David C ^b   Sufi, Amir ^c  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b UNIVERSITY OF VIRGINIA   (United States)

^c UNIVERSITY OF CHICAGO   (United States)

Author keywords

Capital expenditures; Covenants; Financial constraints; Investment

Indexed keywords

EID: 67349180230     PISSN: 0304405X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jfineco.2008.04.008     Document Type: Article

References (43)

1. Aghion P., and Bolton P. An incomplete contracts approach to financial contracting. Review of Economic Studies 59 (1992) 473-494
2. Andrade G., and Kaplan S. How costly is financial (not economic) distress? Evidence from highly leveraged transactions that become distressed. Journal of Finance 53 (1998) 1443-1493
3. Arellano M., and Honore B. Panel data models: some recent developments. In: Heckman J., and Leamer E. (Eds). Handbook of Econometrics vol. 5 (2001), North-Holland, Amsterdam 3229-3296
4. Baird D., and Rasmussen R. Private debt and the missing lever of corporate governance. University of Pennsylvania Law Review 154 (2006) 1209-1252
5. Beneish M., and Press E. Costs of technical violation of accounting-based debt covenants. The Accounting Review 68 (1993) 233-257
6. Beneish M., and Press E. The resolution of technical default. The Accounting Review 70 (1995) 337-353
7. Benmelech E., Garmaise M., and Moskowitz T. Do liquidation values affect financial contracts? Evidence from commercial loan contracts and zoning regulation. Quarterly Journal of Economics 120 (2005) 1121-1154
8. Berlin M., and Mester L. Debt covenants and renegotiation. Journal of Financial Intermediation 2 (1992) 95-133
9. Bester, C., Hansen, C., 2006. A penalty function approach to bias reduction in nonlinear panel models with fixed effects. Unpublished Working Paper, University of Chicago Graduate School of Business.
10. Billett M., King D., and Mauer D. The effect of growth opportunities on the joint choice of leverage, maturity and covenants. Journal of Finance 62 (2007) 697-730
11. Bradley, M., Roberts, M., 2003. The structure and pricing of debt covenants. Unpublished Working Paper, The Wharton School of the University of Pennsylvania.
12. Chamberlain G. Panel data. In: Griliches Z., and Intriligator M. (Eds). Handbook of Econometrics vol. 2 (1984), North-Holland, Amsterdam 1247-1318
13. Chava S., and Roberts M. How does financing impact investment? The role of debt covenants. Journal of Finance 63 (2008) 2085-2121
14. Chen K., and Wei K. Creditors' decisions to waive violations of accounting-based debt covenants. The Accounting Review 68 (1993) 218-232
15. DeAngelo H., DeAngelo L., and Wruck K. Asset liquidity, debt covenants, and managerial discretion in financial distress: the collapse of L.A. Gear. Journal of Financial Economics 64 (2002) 3-34
16. DeMarzo P., and Fishman M. Agency and optimal investment dynamics. Review of Financial Studies 20 (2007) 151-188
17. Demiroglu, C., James, C., 2007. The information content of bank loan covenants. Unpublished Working Paper, University of Florida.
18. Dichev I., and Skinner D. Large sample evidence on the debt covenant hypothesis. Journal of Accounting Research 40 (2002) 1091-1123
19. Faulkender M., and Petersen M. Does the source of capital affect capital structure?. Review of Financial Studies 19 (2006) 45-79
20. Fernandez-Val, I., 2005. Estimation of structural parameters and marginal effects in binary choice panel data models with fixed effects. Unpublished Working Paper, Boston University.
21. Garleanu N., and Zwiebel J. Design and renegotiation of debt covenants. Review of Financial Studies 22 (2007) 749-781
22. Gomes, A., Phillips, G., 2005. Why do firms issue private and public securities? Unpublished Working Paper, University of Maryland.
23. Harris M., and Raviv A. Capital structure and the informational role of debt. Journal of Finance 45 (1990) 321-349
24. Hart O. Firms, Contracts, and Financial Structure (1995), Oxford University Press, London
25. Houston J., and James C. Bank information monopolies and the mix of private and public debt claims. Journal of Finance 51 (1996) 1863-1889
26. Jensen M., and Meckling W. Theory of the firm: managerial behavior, agency costs, and ownership structure. Journal of Financial Economics 3 (1976) 305-360
27. Jensen M. Agency cost of free cash flow, corporate finance, and takeovers. American Economic Review 76 (1986) 323-329
28. Kahan, M., Tuckman, B., 1993. Private vs. public lending: evidence from covenants. Unpublished Working Paper, UCLA Anderson School of Management.
29. Kaplan S., and Strömberg P. Financial contracting theory meets the real world: evidence from venture capital contracts. Review of Economic Studies 70 (2003) 281-315
30. Kaplan S., and Strömberg P. Characteristics, contracts, and actions: evidence from venture capital analyses. Journal of Finance 59 (2004) 2177-2210
31. Lerner J., Shane H., and Tsai A. Do equity financing cycles matter? Evidence from biotechnology alliances. Journal of Financial Economics 67 (2003) 411-446
32. Moody's Investors Service, 2006. Default and Recovery Rates of Corporate Bond Issuers, 1920-2005. Special comment available from: 〈http://www.moodys.com.br/brasil/pdf/Default2006.pdf〉.
33. Rajan R., and Winton A. Covenants and collateral as incentives to monitor. Journal of Finance 47 (1995) 1367-1400
34. Roberts, M., Sufi, A., 2009. Control rights and capital structure: an empirical investigation. Journal of Finance, forthcoming.
35. SEC, 1999. Materiality. Securities and Exchange Commission Staff Accounting Bulletin no. 99. Available from: 〈http://www.sec.gov/interps/account/sab99.htm〉.
36. SEC, 2007. Final rule: additional form 8-K disclosure requirements and acceleration of filing date. Available from: 〈http://www.sec.gov/rules/final/33-8400.htm〉.
37. Smith C. A perspective on accounting-based debt covenant violations. The Accounting Review 68 (1993) 289-303
38. Smith C., and Warner J. On financial contracting: an analysis of bond covenants. Journal of Financial Economics 7 (1979) 117-161
39. Sweeney A. Debt covenant violations and managers' accounting responses. Journal of Accounting and Economics 17 (1994) 281-308
40. Sufi A. Bank lines of credit in corporate finance: an empirical analysis. Review of Financial Studies 23 (2009) 1057-1088
41. Verde, M., 1999. Loan preserve: the value of covenants. FitchIBCA Loan Products Special Report. Available from 〈www.fitchibca.com〉.
42. Wooldridge J. Econometric Analysis of Cross Section and Panel Data (2002), MIT Press, Boston
43. Zwiebel J. Dynamic capital structure under managerial entrenchment. American Economic Review 86 (1996) 1197-1215