Design and Renegotiation of Debt Covenants

By Nicolae Gârleanu, Jeffrey Zwiebel. 2009

371 citations recorded by the source corpus.

Subfields: Economics and Econometrics, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/e89c9ca4362dbf4a1bb10147e8d2e6b7825a3f35

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Citations in the corpus

Capital versus Performance Covenants in Debt Contracts (2012, positive): “Alternatively, covenants can serve as a screening device that helps lenders obtain information about the borrower (Garleanu and Zwiebel 2009).”
Bank liquidity provision across the firm size distribution (2020, background): “(2020) on covenants; and work studying combinations of loan terms in Hart and Moore (1994) ; Rajan and Winton (1995) ; Park (20 0 0) ; Donaldson et al.”
Debt Covenant Renegotiations and Creditor Control Rights (2014, neutral): “Although our study is suggestive of the type of connection between ex ante debt contract design and ex post outcomes hypothesized in Garleanu and Zwiebel (2009), it is not conclusive.”
Who Uses Financial Reports and for What Purpose? Evidence from Capital Providers (2014, neutral): “The most common financial covenants are those based on net worth, working capital, leverage, interest coverage and cash flow (Citron, 1992b; Bradley and Roberts, 2004; Gârleanu and Zwiebel, 2009), though debt/EBITDA covenants are increasingly popular (Demiroglu and James, 2010).”
Accounting Conservatism and Debt Contracts: Efficient Liquidation and Covenant Renegotiation (2013, background): “Garleanu and Zwiebel (2009) analyze the design and renegotiation of covenants and show that adverse selection problems lead to the allocation of greater ex-ante decision rights to the uninformed creditor through tighter covenants that are frequently waived upon renegotiation ex-post.”
The Information Content of Bank Loan Covenants (2010, neutral): “For example, Gârleanu and Zwiebel (2009) present a model in which borrowers are better informed than lenders concerning their future risk-shifting opportunities.”
The Role of Dynamic Renegotiation and Asymmetric Information in Financial Contracting (2015, positive): “Building on these insights, Garleanu and Zwiebel (2009) show that in a setting with asymmetric information stronger rights are granted to the lender in the initial contract, precisely the opposite implication of the traditional incomplete contracts literature.”
Debt Covenants and Accounting Conservatism (2010, background): “In practice, this results in frequent transfers of control followed by one- sided renegotiations in which private debtholders selectively relax covenants in exchange for some additional consideration (Dichev and Skinner 2002; Garleanu and Zwiebel 2009).”
The Role of Information and Financial Reporting in Corporate Governance and Debt Contracting (2010, methodology): “For example, Garleanu and Zwiebel (2008) highlight the rich set of predictions regarding how information asymmetry between entrepreneurs and lenders affects the design and renegotiation of debt contracts.”
Accounting Information in Financial Contracting: The Incomplete Contract Theory Perspective (2016, neutral): “In these studies, covenants are used to provide stronger control rights to a less 18 informed or less “protected” party (Berlin and Mester, 1992, Sridhar and Magee, 1996, Gorton and Kahn, 2000, and Garleanu and Zwiebel, 2009).”
Renegotiation of Financial Contracts: Evidence from Private Credit Agreements (2009, neutral): “Kahn (2000), and Garleanu and Zwiebel (2009). For theories of financial”
The Private Equity Advantage: Leveraged Buyout Firms and Relationship Banking (2011, neutral): “9 Gârleanu and Zwiebel (2006) predict that under costly renegotiation contracts would be written to minimize the frequency of future violations, i.”