The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.
How Does Financing Impact Investment? The Role of Debt Covenants
Open accessAbstract
We identify a specific channel (debt covenants) and the corresponding mechanism (transfer of control rights) through which financing frictions impact corporate investment. Using a regression discontinuity design, we show that capital investment declines sharply following a financial covenant violation, when creditors use the threat of accelerating the loan to intervene in management. Further, the reduction in investment is concentrated in situations in which agency and information problems are relatively more severe, highlighting how the state‐contingent allocation of control rights can help mitigate investment distortions arising from financing frictions.
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Cites
Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476
What Do We Know about Capital Structure? Some Evidence from International Data
RAJAN, R. G., & ZINGALES, L. (1995) · The Journal of Finance · doi:10.1111/j.1540-6261.1995.tb05184.x · Cited by 6,538
Dynamic Investment Models and the Firm's Financial Policy
Bond, S., & Meghir, C. (1994) · The Review of Economic Studies · doi:10.2307/2297978 · Cited by 979
Cited by
Endogeneity in Empirical Corporate Finance1
Roberts, M. R., & Whited, T. M. (2013) · Handbook of the Economics of Finance · doi:10.1016/b978-0-44-453594-8.00007-0 · Cited by 2,459
Self-citationEnvironmental externalities and cost of capital
Chava, S. (2014) · Management Science · doi:10.1287/mnsc.2013.1863 · Cited by 1,851
Self-citationThe role of information and financial reporting in corporate governance and debt contracting
Armstrong, C. S., Guay, W. R., & Weber, J. P. (2010) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2010.10.001 · Cited by 1,494
Creditor control rights and firm investment policy☆
Nini, G., Smith, D. C., & Sufi, A. (2009) · Journal of Financial Economics · doi:10.1016/j.jfineco.2008.04.008 · Cited by 773
The impact of climate change on the cost of bank loans
Javadi, S., & Masum, A.-A. (2021) · Journal of Corporate Finance · doi:10.1016/j.jcorpfin.2021.102019 · Cited by 594
Metadata
- Authors
- CHAVA, S., & ROBERTS, M. R.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2008-09-10
- Volume
- 63
- Issue
- 5
- Pages
- 2085-2121
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W3121797308
- Cited by
- 2,068
- References
- 3
- FWCI
- 180.99
- Type
- journal article
- Language
- en
- Open access
- green
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- CHAVA, S., & ROBERTS, M. R. (2008). How Does Financing Impact Investment? The Role of Debt Covenants. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.2008.01391.x
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