The agency costs of investment opportunities and debt contracting: Evidence from exogenous shocks to government spending

IF 2.2 3区管理学 Q2 BUSINESS, FINANCE Journal of Business Finance & Accounting Pub Date : 2023-12-14 DOI:10.1111/jbfa.12769

Jeffrey L. Callen, Mahfuz Chy

引用次数: 0

Abstract

This study investigates the impact of macroeconomic shocks to firm investment opportunities on firm debt contracting policy. We find that adverse shocks to investment opportunities lead to a significant reduction in the use of debt covenants in syndicated bank loans. Consistent with incomplete contract theory, we show that firms mitigate debt–equity conflicts arising out of investment opportunities by employing accounting-based financial covenants rather than non-accounting-based prepayment covenants. Adverse shocks to investment opportunities also lead to a concomitant decrease in the cost of borrowing. We find consistent evidence for corporate bond covenants and bond market borrowing costs as well. Overall, this study resolves prior mixed evidence concerning the impact of investment opportunities on debt contracting and connects macroeconomic theory with the accounting literature on debt contracting.

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投资机会和债务契约的代理成本：来自政府支出外生冲击的证据

本研究探讨了宏观经济对企业投资机会的冲击对企业债务契约政策的影响。我们发现，投资机会的不利冲击会导致银团贷款中债务契约的使用大幅减少。与不完全契约理论一致的是，我们发现企业通过采用基于会计的财务契约而非基于非会计的预付契约来缓解投资机会带来的债务-权益冲突。投资机会的不利冲击也会导致借贷成本的下降。我们在公司债券契约和债券市场借贷成本方面也发现了一致的证据。总之，本研究解决了之前关于投资机会对债务契约影响的混合证据，并将宏观经济理论与关于债务契约的会计文献联系起来。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Business Finance & Accounting BUSINESS, FINANCE-

CiteScore

4.40

自引率

17.20%

发文量

期刊介绍： Journal of Business Finance and Accounting exists to publish high quality research papers in accounting, corporate finance, corporate governance and their interfaces. The interfaces are relevant in many areas such as financial reporting and communication, valuation, financial performance measurement and managerial reward and control structures. A feature of JBFA is that it recognises that informational problems are pervasive in financial markets and business organisations, and that accounting plays an important role in resolving such problems. JBFA welcomes both theoretical and empirical contributions. Nonetheless, theoretical papers should yield novel testable implications, and empirical papers should be theoretically well-motivated. The Editors view accounting and finance as being closely related to economics and, as a consequence, papers submitted will often have theoretical motivations that are grounded in economics. JBFA, however, also seeks papers that complement economics-based theorising with theoretical developments originating in other social science disciplines or traditions. While many papers in JBFA use econometric or related empirical methods, the Editors also welcome contributions that use other empirical research methods. Although the scope of JBFA is broad, it is not a suitable outlet for highly abstract mathematical papers, or empirical papers with inadequate theoretical motivation. Also, papers that study asset pricing, or the operations of financial markets, should have direct implications for one or more of preparers, regulators, users of financial statements, and corporate financial decision makers, or at least should have implications for the development of future research relevant to such users.

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