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In this article we examine the relations between risk, the choice of foreign or local contract terms (parameters) and …
Persistent link: https://www.econbiz.de/10014354739
We present new evidence on debt covenant violation (DCV) consequences that have not previously been examined in the literature. In particular, we show that a DCV triggers significant information asymmetry and uncertainty on the part of shareholders and auditors as reflected in higher bid-ask...
Persistent link: https://www.econbiz.de/10013007574
Prior research has shown that trust has a positive effect on the economic welfare of nations. We investigate this result by analyzing the effect of endowed trust on agency problems within organizations. We find that firms located in U.S. counties where trust is more prevalent suffer less from...
Persistent link: https://www.econbiz.de/10013022888
least one earnings-based covenant. Combining earnings-based-covenant contract values from debt agreements with information …
Persistent link: https://www.econbiz.de/10012917308
In a large sample of private credit agreements of publicly-traded firms, nearly all agreements contain at least a boilerplate provision requiring the borrower to purchase insurance. In about 80 percent of the agreements, the insurance covenant is more explicit. Four additional features of the...
Persistent link: https://www.econbiz.de/10012928689
contracts, such as the corporate wrongdoers' self-reporting, preemptive remedial measures instituted by the entity to avoid … corporate criminal indictment, and the government's investigation of specific corporate wrongdoing, facilitate multilevel …
Persistent link: https://www.econbiz.de/10013032004
Corporate governance systems exist to discourage self-interested behavior. One question that is often overlooked is how … extensive these systems should be. A look at corporate governance today suggests that self-interest is high because companies … discourages self interest and encourages trust?Topics, Issues and Controversies in Corporate Governance and Leadership: The Closer …
Persistent link: https://www.econbiz.de/10013063335
Economic models routinely assume firms maximize shareholder wealth; however common law legal systems only require that officers and directors pursue the interests of the corporation, leaving this ill-defined. Economic arguments for shareholder wealth maximization derived from shareholders'...
Persistent link: https://www.econbiz.de/10014023372
The primacy of the principal-agent model of corporate governance is largely undisputed in the existing law and … viewing managers as common agents of several types of investors can better capture the reality of corporate relationships … debt and equity features, can better solve corporate agency problems than existing legal and contractual remedies. By …
Persistent link: https://www.econbiz.de/10013094987
We show that the joint liability lending contracts derived in Ghatak (2000) violate an ex post incentive-compatibility constraint which says the amount of joint liability cannot exceed the amount of individual liability. We derive and characterize optimal separating joint liability contracts...
Persistent link: https://www.econbiz.de/10008911469