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Board monitoring and covenant restrictiveness in private debt contracts during the global financial crisis
journal contribution
posted on 2020-04-01, 00:00 authored by I S Abu Bakar, Arifur KhanArifur Khan, P Mather, George TanewskiGeorge TanewskiWe examine the association between board independence and restrictiveness of covenants in U.S. private debt contracts around the global financial crisis (GFC). We show that board independence is associated with less restrictive covenants suggesting lenders willingness to delegate some monitoring of firms with independent boards. More nuanced analysis between the pre-GFC, GFC and post-GFC periods shows mixed results and we suggest that, during the GFC and its aftermath, lenders place more emphasis on ex ante screening relative to ex post monitoring. We contribute to the literature by providing evidence on covenant use and lenders choices in periods of credit rationing.
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Journal
Accounting and financeVolume
60Issue
S1Pagination
661 - 692Publisher
John Wiley & SonsLocation
Chichester, Eng.Publisher DOI
ISSN
0810-5391eISSN
1467-629XLanguage
engPublication classification
C Journal article; C1 Refereed article in a scholarly journalCopyright notice
2018, AFAANZUsage metrics
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