Debt Contracting on Management

• 成果类型: Article
• 署名作者: Akins, Brian; De Angelis, David; Gaulin, Maclean
• 署名单位: Rice University; Utah System of Higher Education; University of Utah
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12893
• 发表日期: 2020
• 页码: 2095-2137
• 关键词: CREDITOR CONTROL RIGHTS; ceo turnover; executive-compensation; firm; AGENCY; MARKET; INVESTMENT; OWNERSHIP; DESIGN; CHOICE

摘要

Change of management restrictions (CMRs) in loan contracts give lenders explicit ex ante control rights over managerial retention and selection. This paper shows that lenders use CMRs to mitigate risks arising from CEO turnover, especially those related to the loss of human capital and replacement uncertainty, thereby providing evidence that human capital risk affects debt contracting. With a CMR in place, the likelihood of CEO turnover decreases by more than half, and future firm performance improves when retention frictions are important, suggesting that lenders can influence managerial turnover, even outside of default states, and help the borrower retain talent.