Correia, M. d. R. (2008) The choice of maturity and additional covenants in debt contracts: A panel data approach. Research in International Business and Finance. 22(3), pp. 284-300. 0275-5319.
| Item Type: | Article |
|---|---|
| Abstract: | This paper provides a comprehensive analysis for the choice of contract terms in UK Eurobonds. Typically, the theory associates the choice of debt contract terms to firm and market characteristics, arguing that an adequate choice of these terms allows for the reduction of debt contracting costs. We use a panel data approach to examine the validity of extant predictions concerning the choice of maturity, call options, convertible options and protective covenants. Findings provide support to the agency prediction that debt contract terms function as alternative control mechanisms. Additionally, complementary role is found for the use of convertible and call options. Evidence that managers follow a maturity-matching rule, favour capital structure’s flexibility in high growth scenarios and use protective covenants when firm’s credibility is low corroborates further agency predictions. |
| Uncontrolled Keywords: | debt contract design, Eurobonds, panel data estimation |
| Subjects: |
H Social Sciences > HG Finance > HG3691 Credit. Debt. Loans H Social Sciences > HG Finance > HG3810 Foreign exchange. International finance. International monetary system |
| Creators: | Correia, Maria do Rosario |
| Publisher: | Elsevier |
| Faculties, Divisions and Institutes: |
Faculties > Faculty of Business & Law > Accounting & Finance University Faculties, Divisions and Research Centres - OLD > Faculty of Business & Law > Accounting and Finance |
| Date: | 14 September 2008 |
| Date Type: | Publication |
| Page Range: | pp. 284-300 |
| Journal or Publication Title: | Research in International Business and Finance |
| Volume: | 22 |
| Number: | 3 |
| Language: | English |
| DOI: | https://doi.org/10.1016/j.ribaf.2007.09.001 |
| ISSN: | 0275-5319 |
| Status: | Published / Disseminated |
| Refereed: | Yes |
| URI: | http://nectar.northampton.ac.uk/id/eprint/6283 |
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