Covenants, Creditorss Simultaneous Equity Holdings, and Firm Investment Policies

2013 ◽  
Author(s):  
Sudheer Chava ◽  
Rui Wang ◽  
Hong Zou
Keyword(s):  
Firm Investment ◽  
Investment Policies ◽  
Equity Holdings

Covenants, Creditors’ Simultaneous Equity Holdings, and Firm Investment Policies

2018 ◽  
Vol 54 (2) ◽  
pp. 481-512 ◽  
Author(s):  
Sudheer Chava ◽  
Rui Wang ◽  
Hong Zou
Keyword(s):  
Capital Expenditure ◽  
Risk Shifting ◽  
Firm Investment ◽  
Investment Policies ◽  
Loan Contracts ◽  
Frequent Use ◽  
Debt Issuance ◽  
Equity Holdings

This article analyzes how creditors’ simultaneous debt and equity holdings affect firm investment policies. We find that firms with dual ownership are less likely to have capital expenditure restrictions in loan contracts, and the relation varies in predicted ways with the monitoring needs of borrowers and the monitoring capacity of dual owners. A less frequent use of capital expenditure restrictions, however, does not result in borrowers’ risk-shifting. Dual ownership firms are also more likely to be granted an unconditional waiver and do not significantly reduce debt issuance or investment expenditures after a financial covenant violation. Our results highlight how dual ownership can help mitigate shareholder–creditor conflicts.

Risk Attitude and Corporate Investment under Output Market Uncertainty: Evidence from The Mekong River Delta, Vietnam

2016 ◽  
pp. 59-70
Author(s):  
Ninh Le Khuong ◽  
Nghiem Le Tan ◽  
Tho Huynh Huu
Keyword(s):  
Negative Relationship ◽  
Risk Attitude ◽  
Business Strategies ◽  
Risk Averse ◽  
Market Uncertainty ◽  
Firm Investment ◽  
Output Market ◽  
The Impact ◽  
The Relationship

This paper aims to detect the impact of firm managers’ risk attitude on the relationship between the degree of output market uncertainty and firm investment. The findings show that there is a negative relationship between these two aspects for risk-averse managers while there is a positive relationship for risk-loving ones, since they have different utility functions. Based on the findings, this paper proposes recommendations for firm managers to take into account when making investment decisions and long-term business strategies as well.

Deregulation and Firm Investment: Evidence from the Dismantling of the License System in India

2016 ◽  
Author(s):  
Ivan T. Kandilov ◽  
Asli Leblebicioglu ◽  
Ruchita Manghnani
Keyword(s):  
Firm Investment ◽  
License System

Developing Appropriate Investment Policies: The Foundation Perspective

1996 ◽  
Vol 1996 (7) ◽  
pp. 13-17, 21-23
Author(s):  
Bruce W. Madding
Keyword(s):  
Investment Policies

Separating the Incentive and Entrenchment Effects from CEO'S Equity Holdings

2009 ◽  
Author(s):  
Mufaddal H. Baxamusa
Keyword(s):  
Equity Holdings

Formal Financial Sector Access; Does it Matter for Firm Investment?

2009 ◽  
Author(s):  
Alexander Karaivanov ◽  
Jesus Saurina Salas ◽  
Robert M. Townsend ◽  
Sonia Ruano
Keyword(s):  
Financial Sector ◽  
Firm Investment

Impact of the Sub-Prime Crisis on Investment Policies in Philippines

2013 ◽  
Author(s):  
Sadhvi Mohindru
Keyword(s):  
Investment Policies
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