Growth Opportunities And The Choice of Leverage, Debt Maturity, And Covenants  

Oleh:

Billett, Matthew T. ; Mauer, David C. ; Tao-Hsien, Dolly King

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 62 no. 2 (Apr. 2007), page 697-730.
Topik: leverage; studies; leverage; debt; covenants; business growth; opportunity
Fulltext: p 697.pdf (146.09KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We investigate the effect of growth opportunities in a firm's investment opportunity set on its joint choice of leverage, debt maturity, and covenants. Using a database that contains detailed debt covenant information, we provide large - sample evidence of the incidence of covenants in public debt and construct firm - level indices of bondholder covenant protection. We find that covenant protection is increasing in growth opportunities, debt maturity, and leverage. We also document that the negative relation between leverage and growth opportunities is significantly attenuated by covenant protection, suggesting that covenants can mitigate the agency costs of debt for high growth firms.

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