The role of dynamic renegotiation and asymmetric information in financial contracting

Journal of Financial Economics

Volumn 116, Issue 1, 2015, Pages 61-81

  Roberts, Michael R ^a,b  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b NATIONAL BUREAU OF ECONOMIC RESEARCH   (United States)

Author keywords

Asymmetric information; Control rights; Financial contracts; Renegotiation

Indexed keywords

EID: 84925603211     PISSN: 0304405X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jfineco.2014.11.013     Document Type: Article

References (67)

1. Adrian T., Shin H. Liquidity and leverage. Journal of Financial Intermediation 2010, 19:418-437.
2. Aghion P., Bolton P. An incomplete contracts approach to financial contracting. Review of Economic Studies 1992, 59:473-494.
3. Albuquerque R., Hopenhayn H.A. Optimal dynamic lending contracts with imperfect enforceability. Review of Economic Studies 2004, 71:285-315.
4. Altman E., Gande A., Saunders A. Bank debt versus bond debt. evidence from secondary market prices. Journal of Money, Credit, and Banking 2010, 42:755-767.
5. Asquith P., Beatty A., Weber J. Performance pricing and bank debt contracts. Journal of Accounting and Economics 2005, 40:101-128.
6. Asquith P., Gertner R., Scharfstein D. Anatomy of financial distress. an examination of junk bond issuers. Quarterly Journal of Economics 1994, 109:625-658.
7. Beneish M., Press E. Costs of technical violation of accounting-based debt covenants. Accounting Review 1993, 68:233-257.
8. Beneish M., Press E. The resolution of technical default. Accounting Review 1995, 70:337-353.
9. Benmelech E., Bergman N. Liquidation values and the credibility of financial contract renegotiation. evidence from US Airlines. Quarterly Journal of Economics 2008, 123:1635-1677.
10. Berger A., Espinosa-Vega M., Frame W., Miller N. Debt maturity, risk, and asymmetric information. Journal of Finance 2005, 60:2895-2923.
11. Biais B., Mariotti T., Rochet J. Dynamic financial contracting. Advances in Economics and Econometrics. Tenth World Congress 2011, vol. 1:125-171. Cambridge University Press, New York, NY.
12. Biais B., Mariotti T., Rochet J.-C., Villeneuve S. Large risks, limited liability, and dynamic moral hazard. Econometrica 2010, 78:73-118.
13. Bolton P., Dewatripont M. Contract Theory, 2005, MIT Press, Cambridge, MA.
14. Bolton P., Scharfstein D. A theory of predation based on agency problems in financial contracting. American Economic Review 1990, 80:93-106.
15. Bradley, M., Roberts, M., 2003. The structure and pricing of debt covenants. Unpublished working paper. Duke University, Durham, NC.
16. Chava S., Livdan D., Purnanandam A. Do shareholder rights affect the cost of bank loans?. Review of Financial Studies 2009, 22:2973-3004.
17. Chava S., Roberts M. How does financing impact investment? The role of debt covenants. Journal of Finance 2008, 63:2085-2121.
18. Chen K., Wei K. Creditors' decisions to waive violations of accounting-based debt covenants. Accounting Review 1993, 68:218-232.
19. Clementi G., Hopenhayn H. A theory of financing constraints and firm dynamics. Quarterly Journal of Economics 2006, 121:229-265.
20. DeMarzo P., Fishman M. Optimal long-term financial contracting. Review of Financial Studies 2007, 20:2079-2128.
21. DeMarzo P., Sannikov Y. Optimal security design and dynamic capital structure in a continuous-time agency model. Journal of Finance 2006, 61:2681-2724.
22. Demiroglu C., James C. The information content of bank loans. Review of Financial Studies 2010, 23:3700-3737.
23. Dessein W. Information and control in ventures and alliances. Journal of Finance 2005, 60:2513-2549.
24. Dewatripont M., Tirole J. A theory of debt and equity. diversity of securities and manager-shareholder congruence. Quarterly Journal of Economics 1994, 109:1027-1054.
25. Dichev I., Skinner I. Large sample evidence on the debt covenant hypothesis. Journal of Accounting Research 2002, 40:1091-1123.
26. Gale D., Hellwig M. Incentive-compatible debt contracts. the one-period problem. Review of Economic Studies 1985, 52:647-663.
27. Gale D., Hellwig M. Repudiation and renegotiation. the case of sovereign debt. International Economic Review 1989, 30:3-31.
28. Garleanu N., Zwiebel J. Design and renegotiation of debt covenants. Review of Financial Studies 2009, 22:749-781.
29. Gorton G., Kahn J. The design of bank loan contracts. Review of Financial Studies 2000, 13:331-364.
30. Gorton G., Winton A. Financial intermediation. Handbook of the Economics of Finance 2003, vol. 1:431-552. Elsevier, North Holland, Amsterdam.
31. Grossman S., Hart O. The costs and benefits of ownership. a theory of vertical and lateral integration. Journal of Political Economy 1986, 94:691-719.
32. Hart O. Firms, Contracts, and Financial Structure 1995, Oxford University Press, New York, NY.
33. Hart O., Moore J. Incomplete contracts and renegotiation. Econometrica 1988, 56:755-785.
34. Hart O., Moore J. Default and renegotiation. a dynamic model of debt. Quarterly Journal of Economics 1998, 113:1-42.
35. Ivashina V. Asymmetric information effects on loan spreads. Journal of Financial Economics 2009, 92:300-319.
36. Ivashina V., Sun Z. Institutional stock trading on loan market information. Journal of Financial Economics 2011, 100:284-303.
37. Jensen M. Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review 1986, 76:323-329.
38. Johnson S. An empirical analysis of the determinants of corporate debt ownership structure. Journal of Financial and Quantitative Analysis 1997, 32:47-69.
39. Kaplan S., Zingales L. Do investment-cash flow sensitivities provide useful measures of financing constraints?. Quarterly Journal of Economics 1997, 112:169-215.
40. Klein J., Moeschberger M. Survival Analysis. Techniques for Censored and Truncated Data, 2003, Springer, New York, NY. second edition.
41. Kovrijnykh N. Debt contracts with partial commitment. American Economic Review 2013, 103:2848-2874.
42. Leftwich R. Accounting information in private markets. evidence from private lending agreements. Accounting Review 1983, 58:23-42.
43. Long J., Freese J. Predicted probabilities for count models. Stata Journal 2001, 1:51-57.
44. Lorenzoni, G., Walentin, K., 2007. Financial frictions, investment, and Tobin's q. Unpublished working paper. Northwestern University, Evanston, IL.
45. Maskin E., Sjorstrom T. Implementation theory. Handbook of Social Choice and Welfare 2002, vol. 1:237-288. Elsevier, North Holland, Amsterdam.
46. Mian, A., Santos, J., 2012. Liquidity risk and maturity management. Unpublished working paper. University of California, Berkeley, CA.
47. Moerman R. The role of information asymmetry and financial reporting quality in debt trading. evidence from the secondary loan market. Journal of Accounting and Economics 2009, 46:240-260.
48. Muller H., Wang J. Hazard rate estimation under random censoring with varying kernels and bandwidths. Biometrics 1994, 50:61-76.
49. Murfin J. The supply side determinants of loan contract strictness. Journal of Finance 2012, 67:1565-1601.
50. Nini G., Smith D., Sufi A. Creditor control rights and firm investment policy. Journal of Financial Economics 2009, 92:400-420.
51. Ortiz-Molina, H., Penas, M., 2004. Lending to small business: the role of loan maturity in addressing information problems. Unpublished working paper. Tilburg University, Tilburg, Netherlands.
52. Quadrini V. Investment and liquidation in renegotiation-proof contracts with moral hazard. Journal of Monetary Economics 2004, 51:713-751.
53. Rajan R. Insiders and outsiders. the choice between informed and arm's-length debt. Journal of Finance 1992, 47:1367-1400.
54. Rampini A., Viswanathan V. Collateral, risk management, and the distribution of debt capacity. Journal of Finance 2010, 65:2293-2322.
55. Rampini A., Viswanathan V. Collateral and capital structure. Journal of Financial Economics 2013, 109:466-492.
56. Roberts M., Sufi A. Control rights and capital structure. an empirical investigation. Journal of Finance 2009, 64:1657-1695.
57. Roberts M., Sufi A. Renegotiation of financial contracts. evidence from private credit agreements. Journal of Financial Economics 2009, 93:159-184.
58. Sannikov Y. Dynamic security design and corporate financing. Handbook of the Economics of Finance 2012, vol. 2:71-122. Elsevier, North Holland, Amsterdam.
59. Santos, J., Winton, A., 2010. Bank capital, borrower power, and loan rates. Unpublished working paper. University of Minnesota, Minneapolis and St. Paul, MN.
60. Scherr F., Hulburt H. The debt maturity structure of small firms. Financial Management 2001, 30:85-111.
61. Sharpe S. Asymmetric information, bank lending, and implicit contracts. a stylized model of customer relationships. Journal of Finance 1990, 45:1069-1087.
62. Smith C. A perspective on violations of accounting based debt covenants. Accounting Review 1993, 68:289-303.
63. Smith C., Warner J. On financial contracting. an analysis of bond covenants. Journal of Financial Economics 1979, 7:117-161.
64. Strebulaev I., Yang B. The mystery of zero-leverage firms. Journal of Financial Economics 2013, 109:1-23.
65. Sweeny A. Debt covenant violations and managers' accounting responses. Journal of Accounting and Economics 1994, 17:281-308.
66. Tirole J. The Theory of Corporate Finance 2006, Princeton University Press, Princeton, NJ.
67. Wright R., Cooke W., Gray R. Understanding the credit agreement. The Handbook of Loan Syndications and Trading 2007, 209-392. McGraw-Hill, New York, NY. A. Taylor, A. Sansone (Eds.).