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Impact of Debt Covenants on Investment by Vera Soares is a document available to read on EtoBox.
What is Impact of Debt Covenants on Investment about?
1) The document examines how debt covenant violations impact corporate investment. Using a regression discontinuity design around covenant thresholds, it finds that capital investment declines sharply (around 1% of capital per quarter) following a covenant violation. 2) This decline is concentrated among firms where agency problems between borrowers and lenders are more severe, such as firms with no previous relationship to their lender. 3) The results suggest that creditors use the transfer of control rig
- Author
- Vera Soares
- Language
- EN