Creditor Control Rights, Corporate Governance, and Firm Value

Nini, Greg; Smith, David C.; Sufi, Amir

doi:10.1093/rfs/hhs007

Cited by 621 publications

(367 citation statements)

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“…The tighter covenants associated to lines to riskier borrowers may limit the insurance lines provide these customers. Nini et al (2009a) find that violations of financial covenants are common. In particular, they find that, during the period 1996-2007, 10-20% of public firms were in violation of a financial covenant during any particular year and 40% of the firms were in violation at some point during this period.…”

Section: Financial Covenantsmentioning

confidence: 99%

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The use of bank lines of credit in corporate liquidity management: A review of empirical evidence

Demiroglu

James

2011

Journal of Banking & Finance

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Section: Financial Covenantsmentioning

confidence: 99%

“…Notice that this contingency is not necessarily bad for the firm's shareholders. In fact, Nini et al (2009a) find that firm operating and stock price performance improve after covenant violations, which suggests that banks play a significant governance role in distressed firms and their actions benefit shareholders.…”

Section: Financial Covenantsmentioning

confidence: 99%

The use of bank lines of credit in corporate liquidity management: A review of empirical evidence

Demiroglu

James

2011

Journal of Banking & Finance

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“…My use of firm leverage is consistent with prior literature. As Nini et al (2012) and Cohen et al (2014) indicate, leverage ratio, as computed in this study, is very commonly used in debt contracts. As I discuss in Sect.…”

Section: Factors Associated With the Choice Of Recognition Versus Dismentioning

confidence: 99%

Recognition versus disclosure: evidence from fair value of investment property

Israeli

2015

Rev Account Stud

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The application of International Accounting Standard 40, Investment Property, in the European Union created a unique setting to study the implications of a decision to recognize versus disclose financial statements' items, because in this setting recognized and disclosed investment-property-related amounts share a common measurement base, i.e., fair value. I use this setting to (1) explore a firm's choice to recognize versus disclose fair values of investment properties, (2) test whether recognized and disclosed amounts are valued equally by investors, and (3) determine whether these amounts exhibit equivalent associations with future financial outcomes. To correct for self-selection concerns and assure I compare analogous amounts, I develop a selection model and construct investment-property-related amounts that differ only in whether their components are recognized or disclosed. I find that (1) contractual and asset-pricing incentives help to explain the recognition versus disclosure choice, (2) investors place smaller valuation weights on disclosed amounts, and (3) recognized and disclosed amounts exhibit statistically equivalent associations with future changes in net rental income and cash flows from operations. Taken together, the evidence suggests that managers are opportunistic in making the recognition versus disclosure choice and that even when recognized and disclosed amounts share an equivalent measurement base and are equally relevant for future financial outcomes, investors weight disclosed information less heavily in determining a firm's value.Keywords Recognition versus disclosure Á Fair value of investment property Á Analogous amounts Á Value relevance

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“…Given that earnings-based covenants are the most frequently used covenants in loan contracts and that a tight trend feature is often used in these covenants, our study highlights that ignoring threshold changes is likely to introduce significant measurement error into the covenant slack estimation. 4 Because of the strong link between covenant slack and the occurrence of covenant violations, the accurate estimation of the strictness of financial covenants is particularly relevant to the rapidly expanding research on covenant violations (Chava and Roberts, 2008;Roberts and Sufi, 2009a;Nini et al, 2009Nini et al, , 2012Freudenberg et al, 2012).…”

Section: Introductionmentioning

confidence: 99%