Determinants of Contracting Structure: Evidence from Syndicated Loan Agreements.

详细信息   

• 作者：Zhang ; Jingjing.
• 学历：Doctor
• 年：2012
• 导师：Lys,Thomas,eadvisorWalther,Beverlyecommittee memberFishman,Michael J.ecommittee memberSunder,Jayanthiecommittee memberChapman,Craigecommittee member
• 毕业院校：Northwestern University
• Department：Accounting Information and Management.
• ISBN：9781267621689
• CBH：3527717
• Country：USA
• 语种：English
• FileSize：3554715
• Pages：152

文摘

This dissertation examines the determinants of the optimal contracting structure using a sample of syndicated loan agreements. It consists of two essays that explore the determinants from a macro- and micro-perspective,respectively. The first essay focuses on a macro determinant,examining whether changes in competition among lenders in the syndicated loan market affect financial covenant use in loan agreements. Consistent with the idea that an increase in competition reduces the incentive alignment benefits of financial covenants,I find a negative association between competition and the use of financial covenants. Moreover,this negative relation is stronger for borrowers that are more likely to be affected by the positive shift in the supply of capital in the syndicated loan market. In addition,I find that competition has a similar relation with the use of interest-increasing performance pricing. This implies that increasing borrowers outside options has an adverse impact on the effectiveness of performance-based contingencies in addressing moral hazard problems in debt contracting. In the second study,my co-authors and I examine the determinants from a micro perspective. We investigate how conservatism in reported net asset values of borrowers defined as balance sheet conservatism) affects the price and monitoring terms in the syndicated loans. Balance sheet conservatism is measured as the residual from a regression of book-to-market ratio on proxies for rents,default risk,and misvaluation in the market value. There are two principal findings. First,balance sheet conservatism is negatively associated with loan pricing and covenant restrictiveness. Second,the association between asymmetric timeliness and loan pricing depends on the level of balance sheet conservatism. The findings reveal a dual role of balance sheet conservatism in debt contracting. On one hand,conservative reporting of asset values reduces lenders uncertainty regarding asset valuation and mitigates debtholder-shareholder conflicts. On the other hand,reporting of conservative asset values constrains the borrowers ability to reflect adverse economic events in net asset values in future.