Creditor control rights and firm investment policy

• 成果类型: Article
• 署名作者: Nini, Greg; Smith, David C.; Sufi, Amir
• 署名单位: University of Chicago; University of Pennsylvania; University of Virginia
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.04.008
• 发表日期: 2009
• 页码: 400-420
• 关键词: investment; financial constraints; covenants; Capital expenditures

摘要

We present novel empirical evidence that conflicts of interest between creditors and their borrowers have a significant impact on firm investment policy. We examine a large sample of private credit agreements between banks and public firms and find that 32% of the agreements contain an explicit restriction on the firm's capital expenditures. Creditors are more likely to impose a capital expenditure restriction as a borrower's credit quality deteriorates, and the use of a restriction appears at least as sensitive to borrower credit quality as other contractual terms, such as interest rates, collateral requirements, or the use of financial covenants. We find that capital expenditure restrictions cause a reduction in firm investment and that firms obtaining contracts with a new restriction experience subsequent increases in their market value and operating performance. (C) 2009 Elsevier B.V. All rights reserved.