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We investigate how institutional (non-bank) investors that simultaneously invest in a firm's debt and equity (dual-holders) influence the firm's voluntary disclosure. Prior studies show that institutional dual-holders trade on private information received from a borrower through their lending...
Persistent link: https://www.econbiz.de/10012860876
This paper reviews theoretical and empirical work on financial contracting that is relevant to accounting researchers. Its primary objective is to discuss how the use of accounting information in contracts enhances contracting efficiency and to suggest avenues for future research. We argue that...
Persistent link: https://www.econbiz.de/10012986904
We study how wholesalers assess borrower credit risk and extend trade credit to retailers in economies where formal market institutions, such as financial reporting systems, auditing, and courts, are nonexistent or function poorly. Using the setting of a large market in India, we find that...
Persistent link: https://www.econbiz.de/10013241299
We examine the role of dynamic covenant threshold values in syndicated loan agreements. We document that 45% of syndicated loans specify dynamic covenant thresholds in earnings-based covenants and that these changing thresholds typically become tighter over the life of a loan. We find that...
Persistent link: https://www.econbiz.de/10013036623
We document a novel trend in syndicated lending where some participants voluntarily waive their rights to access borrowers’ private information. Although these public-side lenders are unable to use private information to evaluate borrowers’ creditworthiness, forgoing their access to private...
Persistent link: https://www.econbiz.de/10013210857
We study how wholesalers assess borrower credit risk and extend trade credit to retailers in economies where formal market institutions, such as financial reporting systems, auditing, and courts, are nonexistent or function poorly. Using the setting of a large market in India, we find that...
Persistent link: https://www.econbiz.de/10013211350
We delineate key channels through which flows of confidential information to loan syndicate participants impact the dynamics of information arrival in prices. We isolate the timing of private information flows by estimating the speed of price discovery over quarterly earnings cycles in both...
Persistent link: https://www.econbiz.de/10012746729
In this paper, I exploit the syndicated loan market to explore the impact of information asymmetry on the cost of debt capital. As a measure of information asymmetry associated with a borrowing firm, I use the bid-ask spread on the firm's loans traded on the secondary loan market. I find that a...
Persistent link: https://www.econbiz.de/10012720534
We investigate how the availability of traded credit default swaps (CDSs) affects the referenced firms' voluntary disclosure choices. CDSs enable lenders to hedge their credit risk exposure, weakening their incentives to monitor borrowers. We predict that reduced lender monitoring in turn leads...
Persistent link: https://www.econbiz.de/10012913578
Bond defaults are undesirable yet natural outcomes of risky investments. What is also crucial but hitherto underexplored is the unexpectedness of defaults. We develop a parsimonious measure of default unexpectedness and highlight its economic importance by demonstrating a positive association...
Persistent link: https://www.econbiz.de/10014350296