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This paper studies the design of optimal contracts in dynamic environments where agents have private information that is persistent. In particular, I focus on a continuous time version of a benchmark insurance problem where a risk averse agent would like to borrow from a risk neutral lender to...
Persistent link: https://www.econbiz.de/10012772314
Carrizosa and Ryan (2017) explore the use of private information covenants, which contractually oblige borrowers to provide their lenders with private information: projected or intra-quarter financial statements. The authors offer evidence that creditors acquire private information about...
Persistent link: https://www.econbiz.de/10012951596
Change of management restrictions (CMRs) in loan contracts give lenders explicit ex-ante control rights over managerial retention and selection. This paper shows that lenders use CMRs to mitigate risks arising from CEO turnover, especially those related to the loss of human capital and...
Persistent link: https://www.econbiz.de/10012903452
.e., profitability) ratios rather than credit ratings. Overall, our study demonstrates how the design of debt contracts changes in …
Persistent link: https://www.econbiz.de/10012907290
We examine whether managerial overconfidence impacts the use of performance-pricing provisions in loan contracts (PSD). Managers with biased views may issue PSD because they consider this form of debt to be mispriced. Our evidence shows that overconfident managers are more likely to issue...
Persistent link: https://www.econbiz.de/10012940196
Persistent link: https://www.econbiz.de/10012821211
I investigate whether and how syndicate size influences the type of covenants used in debt contracts. Prior theory and …
Persistent link: https://www.econbiz.de/10012971458
We examine the determinants of events of default clauses in syndicated loan and bond contracts, provisions that allow lenders to request the repayment of principal and to terminate lending commitments. We document significant variation in the use of default clauses and their restrictiveness...
Persistent link: https://www.econbiz.de/10012971660
Prior research finds that commercial borrowers provide lenders with private information. This research generally does not identify how lenders obtain such information or the types of information obtained, however, limiting the directness and interpretability of tests of lenders' use of the...
Persistent link: https://www.econbiz.de/10012971965
nor to observable firm characteristics at the initiation of the new loan, such as for example credit risk. It also does …
Persistent link: https://www.econbiz.de/10012975614