Debt Covenant Violation and Cost of Borrowing: Evidence from Quarterly Bond Issue

2011 ◽  
Author(s):  
Umar Rehan Butt
Keyword(s):  
Bond Issue ◽  
Debt Covenant ◽  
Debt Covenant Violation

Impact of proximity to debt covenant violation on earnings management

2013 ◽  
Vol 19 (1) ◽  
pp. 473-505 ◽  
Author(s):  
Diana R. Franz ◽  
Hassan R. HassabElnaby ◽  
Gerald J. Lobo
Keyword(s):  
Earnings Management ◽  
Debt Covenant ◽  
Debt Covenant Violation

scholarly journals KECENDERUNGAN PELANGGARAN PERJANJIAN UTANG PADA PERUSAHAAN KONSTRUKSI DAN PROPERTI DI BEI

2021 ◽  
Vol 14 (2) ◽  
pp. 151-166
Author(s):  
Yunia Panjaitan
Keyword(s):  
Default Risk ◽  
Earnings Quality ◽  
Multiple Linear Regression Model ◽  
Return On Assets ◽  
Current Ratio ◽  
Independent Variables ◽  
Debt Covenant ◽  
Debt Covenant Violation ◽  
The Impact

The importance of debt covenant violation is to minimize the debtholder default risk. The possibility of debtholder’s default risk may be caused by liquidity problems, low profitability, and bad quality of earnings. Hence, this study aims to proof the tendency of debtholder to violate debt covenants by measuring current ratio volatility, return on assets, and earnings quality as independent variables. By using five companies from construction and property sub-sector that listed on Indonesia Stocks Exchange in 2016- 2018, the data are analyzed with multiple linear regression model for panel data. From this study, we can conclude that the impact of return on assets to debt covenant violation is significantly negative, debtholders with poor financial performance have higher potential to do debt covenant violation. However, there is no evidence that debt covenant violation is affected current ratio volatility and earnings quality.

Creditor Influence and CEO Compensation: Evidence from Debt Covenant Violations

2018 ◽  
Vol 93 (5) ◽  
pp. 23-50 ◽  
Author(s):  
Steven Balsam ◽  
Yuqi Gu ◽  
Connie X. Mao
Keyword(s):  
Risk Taking ◽  
Ceo Compensation ◽  
Regression Discontinuity ◽  
Firm Dynamics ◽  
Debt Covenants ◽  
Compensation Package ◽  
Debt Covenant ◽  
Debt Covenant Violation ◽  
The Right ◽  
Covenant Violations

ABSTRACT Debt covenant violation alters firm dynamics, providing creditors with the right to demand repayment, and via that right, influence firm actions. We provide evidence consistent with creditors employing that channel to influence CEO compensation. Using regression discontinuity analysis, we show that in the year after a covenant violation, after controlling for other factors, CEO compensation is 8.5 percent lower and the CEO's compensation package contains fewer risk-taking incentives, as the vega associated with newly granted options is 26 percent lower. These changes are more pronounced when the creditor has greater influence, such as when the borrower and creditor have a prior lending relationship, the creditor is a highly reputable bank, or when the borrower is financially weaker. We also find that CEOs' risk-taking incentives decrease with the number of debt covenants; in particular, the number of performance debt covenants being breached. JEL Classifications: G21; G34.

Debt covenant violation and manipulation of accruals

1994 ◽  
Vol 17 (1-2) ◽  
pp. 145-176 ◽  
Author(s):  
Mark L. DeFond ◽  
James Jiambalvo
Keyword(s):  
Debt Covenant ◽  
Debt Covenant Violation

scholarly journals Strategic Disclosure and Debt Covenant Violation

2017 ◽  
Author(s):  
Thomas Bourveau ◽  
Derrald Stice ◽  
Rencheng Wang
Keyword(s):  
Strategic Disclosure ◽  
Debt Covenant ◽  
Debt Covenant Violation

IRCS: Valuing Ethics at the Expense of Inventory

2012 ◽  
Vol 28 (1) ◽  
pp. 153-172 ◽  
Author(s):  
James H. Long ◽  
Lasse Mertins ◽  
DeWayne L. Searcy
Keyword(s):  
Ethical Dilemma ◽  
Ethical Framework ◽  
Top Management ◽  
Professional Conduct ◽  
Ethical Implications ◽  
Course Of Action ◽  
Team Player ◽  
Debt Covenant ◽  
Debt Covenant Violation ◽  
Code Of Professional Conduct

ABSTRACT: Lisa Martin, the newly promoted controller at International Retail Computer Solutions (IRCS), faces an ethical dilemma. According to her calculations, the company should record a substantial inventory impairment loss. However, top management at IRCS is concerned that Martin's proposed inventory impairment adjustment will place the company in violation of an important debt covenant, which would allow the bank to call IRCS's $10 million note. Should Martin insist on keeping her original inventory impairment adjustment? Or should she be a team player and revise the adjustment downward to prevent a debt covenant violation? As students respond to the case questions, they are exposed to a realistic scenario requiring them to think critically about the underlying accounting issues and to consider the ethical implications of Martin's actions. In addition, the case requires them to apply an ethical framework (the AICPA's Code of Professional Conduct) to determine the ethical course of action.

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