Scope for renegotiation in private debt contracts

• 成果类型: Article
• 署名作者: Nikolaev, Valeri V.
• 署名单位: University of Chicago
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2017.11.007
• 发表日期: 2018
• 关键词: incomplete contracts; asymmetric information; capital structure; bank loans; Firm value; covenants; DESIGN; credit; MODEL; contingencies

摘要

I study whether the demand for monitoring explains the scope for renegotiation in private debt contracts. Theory suggests that renegotiation trades off the benefits of enhanced monitoring with the costs of creditor intervention. Consistent with this tradeoff, I show that monitoring demand proxies bear a positive association with renegotiation intensity. In contrast, the costs of creditor intervention are associated with less frequent renegotiations. I also find that contractual monitoring mechanisms, such as covenants and concentrated syndicate structures, are positively related to renegotiation intensity. Furthermore, renegotiations transmit new information to the market, in line with private creditors discovering information during renegotiations. (C) 2017 Elsevier B.V. All rights reserved.