Reputational capital is a frequently cited attribute of private equity transactions. In this paper we construct a simple model to illustrate the relationship between reputational capital, covenants and loan spreads in the leveraged loan market. Our model predicts that reliance on reputational...

In 2012, the Department of Labor (DOL) imposed new disclosure requirements concerning the indirect fees earned by 401(k) retirement plan service providers through revenue sharing agreements with mutual funds. This paper examines the impact of these fee disclosure requirements on the level and...

Priority spreading refers to the practice of firms increasing their reliance on secured and subordinated debt and reducing their reliance on senior debt as their credit quality deteriorates. We argue that priority spreading occurs, in part, because security provides creditors with greater...

Past studies document that incentive conflicts may lead issuer-paid credit rating agencies to provide optimistically-biased ratings. In this paper, we present evidence that investors question the quality of issuer-paid ratings and raise corporate bond yields where the issuer-paid rating is more...

An important advantage of secured relative to unsecured debt is that it provides better protection against dilution from other creditors of the firm. While covenants may provide unsecured lenders protection from dilution arising from the issuance of additional debt, they are less likely to be...

We find that mandated public dissemination of over-the-counter transactions in corporate debt securities via the TRACE system dramatically reduces the average short-term market reaction to rating downgrades by both issuer-paid and investor-paid rating agencies. The effect of dissemination is...