Artikel
Financial debt contracting and managerial agency problems
This paper analyzes if lenders resolve managerial agency problems in loan contracts using sweep covenants. Sweeps require a (partial) prepayment when triggered and are included in many contracts. Exploiting exogenous reductions in analyst coverage due to brokerage house mergers and closures, we find that increased borrower opacity significantly increases sweep use. The effect is strongest for borrowers with higher levels of managerial entrenchment and if lenders hold both debt and equity in the firm. Overall, our results suggest that lenders implement sweep covenants to mitigate managerial agency problems by limiting contingencies of wealth expropriation.
- Language
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Englisch
- Bibliographic citation
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Journal: Financial Management ; ISSN: 1755-053X ; Volume: 53 ; Year: 2024 ; Issue: 1 ; Pages: 99-118 ; Hoboken, NJ: Wiley
- Classification
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Management
- Subject
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agency problems
covenant
loan contract
sweep provision
- Event
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Geistige Schöpfung
- (who)
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Imbierowicz, Björn
Streitz, Daniel
- Event
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Veröffentlichung
- (who)
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Wiley
- (where)
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Hoboken, NJ
- (when)
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2024
- DOI
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doi:10.1111/fima.12444
- Last update
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10.03.2025, 11:45 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Imbierowicz, Björn
- Streitz, Daniel
- Wiley
Time of origin
- 2024
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