Lender Forbearance
| Autor: | Andrew Bird, Aytekin Ertan, Stephen A. Karolyi, Thomas G. Ruchti |
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| Rok vydání: | 2020 |
| Předmět: | |
| Zdroj: | Journal of Financial and Quantitative Analysis. 57:207-239 |
| ISSN: | 1756-6916 0022-1090 |
| DOI: | 10.1017/s0022109020000836 |
| Popis: | We use a threshold-based design to study ex post discretion in lenders’ contractual enforcement of covenant violations. At preset thresholds, lenders enforce contractual breaches only infrequently, but this enforcement is associated with material consequences (e.g., fees and renegotiations). Enforcement varies significantly over time and peaks when credit conditions are tightest, indicating that enforcement is procyclical. Costly coordination reduces enforcement: Syndicates with ex ante restrictive voting requirements enforce at lower rates. Consistent with theories of lender competition and implicit contracting, enforcement rates are lower for borrowers with access to alternative sources of financing and well-reputed lead arrangers. |
| Databáze: | OpenAIRE |
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