The Role of Bond Covenants and Short-Term Debt: Evidence from Brazil
Journal Title: BAR: Brazilian Administration Review - Year 2013, Vol 10, Issue 3
Abstract
This paper examines the role of financial covenants as substitutes for short-term debt and a possible trade off between short-term debt and long-term debt, especially for companies with growth opportunities. Using a sample of 159 corporate bonds issued on the Brazilian Market, we found evidence that: first, financial covenants and short-term debt are substitute tools to minimize agency conflict, as per literature confirming that stronger financial covenants could limit the possible expropriation of debt holders and in exchange debt holders may be willing to lend at longer terms and; second, companies with growth opportunities are willing to exchange shortterm debt for long-term debt under the presence of covenants. Most importantly, this does not seem to be a restriction for financing growth opportunities.
Authors and Affiliations
Silva, Vinícius Augusto Brunassi; Saito, Richard; Barbi, Fernando Carvalhaes
Keywords
Related Articles
- EP ID EP40551
- DOI -
- Views 236
- Downloads 0
The Effects of Trust Transference, Mobile Attributes and Enjoyment on Mobile Trust
Trust is essential in building relationships. In mobile commerce, as in electronic commerce, trust is even more valuable given the absence of human contact and direct observation of the service provider. Despite the im...
The Smart Cities MethodoLogy based on public value: The first evaluation cycle
Several smart cities initiativesare currently underway around the world, and thistrend is expected to grow in the coming years. Such initiatives should bedesigned according to the needs and conditionsof each...
The Entrepreneurial Orientation-Dominant Logic-Performance Relationship in New Ventures: an Exploratory Quantitative Study
Entrepreneurial Orientation (EO) has received substantial conceptual and empirical attention, representing one of the few areas in entrepreneurship research in which a cumulative body of knowledge is developing. Nonethe...
The Role of Food Standards in International Trade: Assessing the Brazilian Beef Chain
The purpose of this paper is to identify how Brazilian beef managers have responded to a rapid expansion and intensification of standards for beef exports. This issue relates to how some Brazilian beef exporters are st...
Human Resources Management Policies and Practices Scale (HRMPPS): Exploratory and Confirmatory Factor Analysis
Given the strategic relevance of Human Resources Management (HRM) in organizations and the lack of scientific instruments to measure employees’ perceptions about policies and practices of HRM, this study aimed to valid...