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Corporate boards and performance pricing in private debt contracts

Abu Bakar, Intan Suryani and Khan, Arifur and Mather, Paul R. and Tanewski, George A. (2018) Corporate boards and performance pricing in private debt contracts. Pacific Basin Finance Journal, 50 (Special issue). pp. 144-162. ISSN 0927-538X

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Abstract

This paper investigates the effects of corporate governance on the use of performance pricing in debt contracts on a sample of newly syndicated loans in the U.S. private debt market. While cross-sectional results provide no evidence for the predicted relation between corporate governance quality and the likelihood of using performance pricing in debt contracts, there is evidence for the predicted positive relation between corporate governance quality and the use of interest-increasing performance pricing provisions. Evidence also provides support for the predicted negative relation between corporate governance quality and the use of financial ratio as the measure of performance underlying the provisions. Overall, empirical evidence supports the hypothesis that debt-holders perceive aspects of corporate governance to be beneficial and factor them in their contracting decisions.

Item Type: Article (Journal)
Additional Information: 3549/50656
Uncontrolled Keywords: Performance pricing, Covenants, Governance, Private debt
Subjects: H Social Sciences > HG Finance > HG4001 Financial management. Business finance. Corporation finance.
Kulliyyahs/Centres/Divisions/Institutes: Kulliyyah of Economics and Management Sciences
Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User: Dr. Intan Suryani Abu Bakar
Date Deposited: 17 Jan 2019 15:47
Last Modified: 09 Apr 2019 11:10
URI: http://irep.iium.edu.my/id/eprint/50656

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