文章基本信息

标题：Do Covenants of Bonds Outstanding Affect the Choice of Covenants of New Issues? Evidence from the U.S. Corporate Bonds
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作者：Yuqian Wang ; Yuqian Wang ; Che-Wei Chiu 等
期刊名称：Accounting and Finance Research
印刷版ISSN：1927-5986
电子版ISSN：1927-5994
出版年度：2017
卷号：7
期号：1
页码：223-236
DOI：10.5430/afr.v7n1p223
语种：English
出版社：Sciedu Press
摘要：This paper investigates the relation between debt covenants of a firm’s bonds outstanding and covenants of its newly issued bonds. On the one hand, since covenants are priced and costly, newly issued bonds may not include covenants that have been used in bonds outstanding, suggesting a negative relation between covenants of bonds outstanding and those of new issues. On the other hand, since firms tend to use boilerplate language in debt indentures, similar covenants of bonds outstanding are likely to be used repeatedly in the contracts of new issues, indicating a positive relation. Based on the U.S. public corporate bonds data from 1990 to 2014, this paper provides empirical evidence that covenants of a firm’s new issues are positively related to covenants of its bonds outstanding, suggesting boilerplate language is widely used in corporate bond contracts. Results also show that use of boilerplate language is significantly related to issuers’ financial condition and economic cycle. Issuers with stable financial condition, as measured by commercial paper ratings, tend to use boilerplate language more frequently. And during the Dot-Com bubble period, boilerplate language is used more prevalently than during the financial crisis period.
关键词：Bond covenants;Dot-Com bubbles;Financial crisis;Boilerplate language