Regulatory monitoring as a substitute for debt covenants

• 成果类型: Article
• 署名作者: Black, EL; Carnes, TA; Mosebach, M; Moyer, SE
• 署名单位: University of Arkansas System; University of Arkansas Fayetteville; Brigham Young University; University of North Carolina; Western Carolina University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2004.01.001
• 发表日期: 2004
• 关键词: commercial-banks; CONTRACTS; earnings; taxes

摘要

Both debt covenants and federal monitoring restrict banks' discretion. We examine whether banks substituted monitoring for covenants by investigating debt issues of 105 banks between 1979 and 1984, a period when monitoring increased. We hypothesize that bank shareholders take advantage of the intersection between debt covenants and regulatory monitoring to reduce agency costs. We find a decrease in the number of debt issues containing such covenants and the total debt subject to such covenants. We find no such decrease during the same period for a sample of non-banking firms, or for banks during a subsequent period. (C) 2004 Elsevier B.V. All rights reserved.