The aftermath of covenant violations: Evidence from China's corporate debt securities

被引：0
|
作者：
Xu, Guang [1 ]
Zhang, Xiaoyan [1 ]
机构：
[1] Tsinghua Univ, PBC Sch Finance, Beijing, Peoples R China
来源：
JOURNAL OF EMPIRICAL FINANCE | 2024年 / 78卷
关键词：
Bond covenant; Technical default; Investor protection; CAPITAL STRUCTURE; CONTROL RIGHTS; AGENCY COSTS; FIRM;
D O I：
10.1016/j.jempfin.2024.101528
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
We document a sharp and persistent decline in bond issuances following covenant violations also called technical defaults. However, we find no evidence that firms' investment and performance change after technical defaults. Furthermore, we document that most of the technical defaults are waived off by bondholders through the debenture holders' meetings. Although covenants serve as tripwires for renegotiation between bond issuers and investors, control rights are rarely transferred from shareholders to bond investors following technical defaults.
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页数：12
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