Conflicting Priorities: A Theory of Covenants and Collateral

• 成果类型: Article
• 署名作者: Donaldson, Jason Roderick; Gromb, Denis; Piacentino, Giorgia
• 署名单位: University of Southern California; Centre for Economic Policy Research - UK; Hautes Etudes Commerciales (HEC) Paris; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13445
• 发表日期: 2025
• 页码: 1739-1768
• 关键词: capital structure; MULTIPLE LENDERS; secured claims; Control rights; debt; CONTRACTS; PROPERTY; COSTS; RISK; RENEGOTIATION

摘要

We develop a theory of secured debt, unsecured debt, and debt with anti-dilution covenants. We assume that, as in practice, covenants convey the right to accelerate if violated, but the new secured debt retains its priority even if issued in violation of covenants. We find that such covenants are nonetheless useful: They provide state-contingent financing flexibility, balancing over- and underinvestment incentives. The optimal debt structure is multilayered, combining secured and unsecured debt with and without covenants. Our results are consistent with observations about debt structure, covenant violations, and waivers. They speak to a policy debate about debt priority.