Corporate Loan Securitization and the Standardization of Financial Covenants

• 成果类型: Article
• 署名作者: Bozanic, Zahn; Loumioti, Maria; Vasvari, Florin P.
• 署名单位: University System of Ohio; Ohio State University; University of Texas System; University of Texas Dallas; University of London; London Business School
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12186
• 发表日期: 2018
• 页码: 45-83
• 关键词: debt contracting evidence; balance-sheet covenants; large-sample evidence; Accounting information; ifrs adoption; flexibility; governance; earnings; monitor; decline

摘要

We examine whether syndicated loans securitized through collateralized loan obligations (CLOs) have more standardized financial covenants. We proxy for the standardization of covenants using the textual similarity of their contractual definitions. We find that securitized loans are associated with higher covenant standardization than nonsecuritized institutional loans. In addition, we show that CLOs with more diverse or frequently rebalanced portfolios are more likely to purchase loans with standardized covenants, potentially because standardization alleviates information processing costs related to loan monitoring and screening. We also document that covenant standardization is associated with greater loan and CLO note rating agreement between credit rating agencies, further supporting the relation between lower information costs and covenant standardization. Overall, our study provides evidence that loan securitization is related to the design of standardized financial covenants.