Managerial ability, information quality, and the design and pricing of corporate debt

Review of Quantitative Finance and Accounting - Tập 51 - Trang 1033-1069 - 2017
Alex Petkevich1, Andrew Prevost2
1John and Lillian Neff Department of Finance, University of Toledo, Toledo, USA
2University of Vermont , Burlington, USA

Tóm tắt

We examine if managerial ability affects the efficiency of the contracting environment with lenders. We find that higher ability alters the balance of information-sensitive covenants demanded by outside investors, increases the issuance of bonds with longer maturity, and decreases the issuance of senior secured debt. We also document higher ability reduces the risk premium demanded by investors on information-sensitive debt. These results are collectively consistent with the premise that the mitigation of information risk is an important dimension of managerial ability that has a direct bearing on the structure and pricing of corporate debt.

Tài liệu tham khảo

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