Is it the Law or the Lawyers? Investment Covenants Around the World
York University - Schulich School of Business; Tilburg Law and Economics Center (TILEC)
Douglas J. Cumming
York University - Schulich School of Business
European Financial Management, Vol, 12, pp. 553-574, 2006
This paper introduces a new dataset from 50 private investment funds from 17 countries around the world. We analyse the frequency of use of investment covenants imposed by institutional investors governing the activities of private investment fund managers in areas pertaining to investment decisions, investment powers, types of investments, fund operations, and limitations on liability. While the data indicate a role for country legality in affecting the frequency of use of fund covenants, the data further indicate that the presence of legally trained managers has a more pronounced role in affecting the use of covenants.
Keywords: Empirical Contracts, Private Equity, Law and Finance
JEL Classification: G24, G28, G31, G32, G35Accepted Paper Series
Date posted: October 26, 2005 ; Last revised: September 10, 2008
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