Abstract

http://ssrn.com/abstract=2021522
 
 

References (18)



 
 

Citations (1)



 


 



Unfriendly Creditors: Debt Covenants and Board Independence


Daniel Ferreira


London School of Economics & Political Science (LSE) - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Miguel A. Ferreira


Nova School of Business and Economics; European Corporate Governance Institute (ECGI)

Beatriz Mariano


London School of Economics & Political Science (LSE)

September 30, 2014

European Corporate Governance Institute (ECGI) - Finance Working Paper No. 443/2014

Abstract:     
We develop and test a theory of the relation between capital structure and the composition of the board of directors. Our model shows that board composition should become more management-unfriendly when a firm is close to financial distress. Empirical tests of this prediction indicate that the number of independent directors increases by roughly 30% following a loan covenant violation. The evidence suggests that board composition is an important channel through which creditors monitor borrowers.

Number of Pages in PDF File: 74

Keywords: Corporate boards, Corporate governance, Covenant violations, Creditor intervention

JEL Classification: G21, G32, G33, G34

working papers series





Download This Paper

Date posted: March 15, 2012 ; Last revised: October 15, 2014

Suggested Citation

Ferreira, Daniel and Ferreira, Miguel A. and Mariano, Beatriz, Unfriendly Creditors: Debt Covenants and Board Independence (September 30, 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 443/2014. Available at SSRN: http://ssrn.com/abstract=2021522 or http://dx.doi.org/10.2139/ssrn.2021522

Contact Information

Daniel Ferreira
London School of Economics & Political Science (LSE) - Department of Finance ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)
HOME PAGE: http://personal.lse.ac.uk/FERREIRD/
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Miguel Almeida Ferreira (Contact Author)
Nova School of Business and Economics ( email )
Campus de Campolide
Lisbon, 1099-032
Portugal
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Beatriz Mariano
London School of Economics & Political Science (LSE) ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
Feedback to SSRN


Paper statistics
Abstract Views: 1,858
Downloads: 406
Download Rank: 41,263
References:  18
Citations:  1

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.281 seconds