The importance of accounting changes in debt contracts: the cost of flexibility in covenant calculations
成果类型：
Article
署名作者：
Beatty, A; Ramesh, K; Weber, J
署名单位：
Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; Massachusetts Institute of Technology (MIT)
刊物名称：
JOURNAL OF ACCOUNTING & ECONOMICS
ISSN/ISSBN：
0165-4101
DOI：
10.1016/S0165-4101(02)00046-0
发表日期：
2002
关键词：
摘要：
In this paper, we examine how the exclusion of voluntary and mandatory accounting changes from the calculation of covenant compliance affects the interest rate charged on the loan. After controlling for self-selection bias and other factors known to affect loan spreads, we find that the rate charged is 84 basis points lower when voluntary accounting changes are excluded and 71 basis points lower when mandatory accounting changes are excluded. Our results suggest that borrowers are willing to pay substantially higher interest rates to retain accounting flexibility that may help them avoid covenant violations and to avoid duplicate record-keeping costs. (C) 2002 Elsevier Science B.V. All rights reserved.
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