Large-Sample Evidence on the Debt Covenant Hypothesis

By Ilia D. Dichev, Douglas J. Skinner. 2002

1,189 citations recorded by the source corpus.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/6718b72fd2ab2a4dabf16a6bad3514118cb990af

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Citations in the corpus

Financial Crisis And Earnings Management: The European Evidence (2014, background): “Because such covenants are partially based on earnings (Dichev and Skinner, 2002), income-increasing manipulations should reduce the probability of violations (DeFond and Jiambalvo, 1994; Sweeney, 1994; Saleh and Ahmed, 2005; Iatridis and Kadorinis, 2009).”
Strategic management during the financial crisis: How firms adjust their strategic investments in response to credit market disruptions (2021, methodology): “Indeed, as previous research has shown, Dealscan firms tend to be larger and more highly levered than the average Compustat firm (Dichev and Skinner, 2002).”
Predicting Earnings Management: The Case of Earnings Restatements (2002, background): “Dichev and Skinner (2002) provide evidence of the extensive use of accounting-based covenants in private debt contracts.”
Impact of proximity to debt covenant violation on earnings management (2013, neutral): “El-Gazzar and Pastena (1990) indicate that loan syndication diversifies lenders’ default risks and thus reduces the agency costs.”
Accounting Quality and Debt Contracting (2008, background): “Incomeincreasing or income-decreasing accounting choices could be optimal borrower responses [Dichev and Skinner (2002); Asquith, Beatty, and Weber (2003)].”
Institutional Stock Trading on Loan Market Information (2011, neutral): “19 Dichev and Skinner (2002) show that covenant violations occur in approximately 30% of loans.”
Does mandatory IFRS adoption facilitate debt financing? (2015, result): “Moreover, in line with prior studies, we document that firms from Worldscope that overlap with either SDC Platinum or Dealscan are also more leveraged and more profitable than the general Worldscope universe (Strahan 1999; Dichev and Skinner 2002).”
Evidence on the use of unverifiable estimates in required goodwill impairment (2012, neutral): “Thus we multiply the covenant indicator variable by leverage.10 Beatty and Weber measure 10 Dichev and Skinner (2002) find that leverage is a relatively noisy proxy for the probability of debt covenant violation; however, holding constant this probability, leverage is likely a good proxy for the…”
The demand for the audit in small companies in the UK (2004, background): “Evidence suggests that bank practices vary widely (Dichev and Skinner, 2002) and, therefore, it is difficult to model the unknown and company-specific nonlinearity.”