How Does Financing Impact Investment? The Role of Debt Covenants

By Sudheer Chava, Michael R. Roberts. 2008

1,856 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/6635fa8d9c3ea7dfe9f7e2202c99a566a6c4be7c

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Citations in the corpus

The Information Content of Bank Loan Covenants (2010, positive): “Our base investment spending and net debt issuance models are slight variations of those used in Chava and Roberts (2008) and Roberts and Sufi (2009), respectively:”
Syndication, Interconnectedness, and Systemic Risk (2018, neutral): “[12]) to match DealScan with Compustat based on firm name, ticker, and location for borrowers that are public firms, have a ticker, and/or have a credit rating.”
Creditor rights and corporate risk-taking (2009, neutral): “Morck, Shleifer and Vishny (1990) and Comment and Jarrell (1995) show that diversifying mergers result in reduction in value and Moeller and Schlingemann (2005) find that stock price reaction is lower in acquisitions that increase both industrial and global diversification.”
Strategic management during the financial crisis: How firms adjust their strategic investments in response to credit market disruptions (2021, methodology): “For a detailed description of the Dealscan dataset, see Chava and Roberts (2008). are unlikely to renegotiate (as they would be facing post-crisis credit conditions), while firms whose long-term debt matures shortly after August 2007 are unlikely to obtain better terms.”
Board Quality and the Cost of Debt Capital: The Case of Bank Loans (2012, positive): “Chava and Roberts (2008) find that several aspects of firm life may be disrupted (e.g., reductions in capital spending) by covenant violations, potentially leading to comprehensive governance index has a maximum value of 17, and a minimum value of zero. reductions in borrowers' stock prices.”
Shareholder Litigation, Reputational Loss, and Bank Loan Contracting (2014, neutral): “We link the DealScan and Compustat databases using the file compiled by Chava and Roberts (2008). After requiring that a firm has at least one bank loan within 5 years before and after the firm’s first SCAL filing date, our sample contains 189 firms sued during 1996 to 2006.”
The voluntary adoption of International Financial Reporting Standards and loan contracting around the world (2011, positive): “Furthermore, restrictive covenants reduce flexibility in investment decisions, which can cause borrowers to abandon profitable investment opportunities to comply with the covenants ( Chava and Roberts 2008; Roberts and Sufi 2008).”
The Role of Private Equity Group Reputation in LBO Financing (2010, positive): “directly (Jensen and Meckling, 1976; and Smith and Warner, 1979) but also provide banks with state contingent control rights that can further reduce risk shifting (Chava and Roberts, 2008; and Nini, Smith, and Sufi, 2009).”
Do Creditor Rights Increase Employment Risk? Evidence from Loan Covenants (2014, background): “The time-series analysis 22In particular, we include investment (Row [9]); a dummy for whether the firm undergoes a divestiture of assets in any given year (Row [10]); 2nd- and 5th-order non-liner splines of the distance from the covenant threshold (Rows [11] and [12]); book leverage (Row [13]); Tob”
Customer Concentration and Loan Contract Terms (2017, neutral): “In that vein, Cohen and Frazzini (2008) report that customers’ earnings 4 surprises are incorporated into suppliers’ stock prices.”