Borrower private information covenants and loan contract monitoring

• 成果类型: Article
• 署名作者: Carrizosa, Richard; Ryan, Stephen G.
• 署名单位: University of Texas System; University of Texas El Paso; New York University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2017.05.004
• 发表日期: 2017
• 关键词: bank loans; lending relationships; corporate governance; DEBT CONTRACTS; RENEGOTIATION; disclosure; asymmetry; CHOICE; equity; cost

摘要

We identify covenants in commercial loan contracts that require public borrowers to periodically disclose two types of accountingzrelated private information to lenders: projected financial statements for future periods and monthly historical financial statements. We hypothesize and provide evidence that: (1) loan contracts include these covenants in settings where they enhance lenders' loan contract monitoring; (2) the covenants are positively associated with the frequency of loan contract amendments; and (3) lenders trade on the borrower private information they receive in secondary loan markets. We further show that the two types of covenants have predictably different determinants and effects. (C) 2017 Elsevier B.V. All rights reserved.