Board monitoring and covenant restrictiveness in private debt contracts during the global financial crisis

Abu Bakar, Intan Suryani and Khan, Arifur and Mather, Paul R. and Tanewski, George A. (2020) Board monitoring and covenant restrictiveness in private debt contracts during the global financial crisis. Accounting and Finance, 60 (SI). pp. 661-692. ISSN 0810-5391 E-ISSN 1467-629X

	PDF (Evidence from publishers' website for MYRA) - Published Version Restricted to Repository staff only Download (1MB) | Request a copy
Preview	PDF (SCOPUS) - Supplemental Material Download (217kB) | Preview
Preview	PDF (WOS) - Supplemental Material Download (269kB) | Preview

Abstract

We examine the association between board independence and restrictiveness of covenants in U.S. private debt contracts around the global financial crisis (GFC). We show that board independence is associated with less restrictive covenants suggesting lenders willingness to delegate some monitoring of firms with independent boards. More nuanced analysis between the pre-GFC, GFC and post-GFC periods shows mixed results and we suggest that, during the GFC and its aftermath, lenders place more emphasis on ex ante screening relative to ex post monitoring. We contribute to the literature by providing evidence on covenant use and lenders choices in periods of credit rationing. © 2018 AFAANZ

Item Type:	Article (Journal)
Additional Information:	3549/81638
Uncontrolled Keywords:	Board independence, Covenant restrictiveness, Debt covenants, Global financial crisis
Subjects:	H Social Sciences > HJ Public Finance H Social Sciences > HJ Public Finance > HJ8003 Public credit. Debts. Loans. Claims
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences
Depositing User:	Dr. Intan Suryani Abu Bakar
Date Deposited:	04 Aug 2020 15:23
Last Modified:	13 Nov 2020 16:04
URI:	http://irep.iium.edu.my/id/eprint/81638

Actions (login required)

View Item