Evidence on the determinants and economic consequences of delegated monitoring
We investigate delegated monitoring by examining the determinants and effects of including cross-acceleration provisions in public debt contracts. We find that cross-acceleration provision use depends on borrowers' going concern relative to liquidation values, debt repayment structures, credit...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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Elsevier
2015
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| Online Access: | http://hdl.handle.net/1721.1/99239 https://orcid.org/0000-0002-2221-5198 |
| _version_ | 1826217951472123904 |
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| author | Beatty, Anne Liao, Scott Weber, Joseph P. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Beatty, Anne Liao, Scott Weber, Joseph P. |
| author_sort | Beatty, Anne |
| collection | MIT |
| description | We investigate delegated monitoring by examining the determinants and effects of including cross-acceleration provisions in public debt contracts. We find that cross-acceleration provision use depends on borrowers' going concern relative to liquidation values, debt repayment structures, credit quality, and financial reporting quality. This suggests that the use of cross-acceleration provisions increases when the costs of cascading defaults are lower, the conflicts between creditor classes are higher, and the benefits of delegating monitoring to banks are higher. We also find a lower interest rate on public debt contracts with cross-acceleration provisions, but the rate reduction depends on borrowers' financial reporting quality. |
| first_indexed | 2024-09-23T17:11:39Z |
| format | Article |
| id | mit-1721.1/99239 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T17:11:39Z |
| publishDate | 2015 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | mit-1721.1/992392022-09-30T00:19:08Z Evidence on the determinants and economic consequences of delegated monitoring Beatty, Anne Liao, Scott Weber, Joseph P. Sloan School of Management Weber, Joseph P. We investigate delegated monitoring by examining the determinants and effects of including cross-acceleration provisions in public debt contracts. We find that cross-acceleration provision use depends on borrowers' going concern relative to liquidation values, debt repayment structures, credit quality, and financial reporting quality. This suggests that the use of cross-acceleration provisions increases when the costs of cascading defaults are lower, the conflicts between creditor classes are higher, and the benefits of delegating monitoring to banks are higher. We also find a lower interest rate on public debt contracts with cross-acceleration provisions, but the rate reduction depends on borrowers' financial reporting quality. 2015-10-13T19:21:56Z 2015-10-13T19:21:56Z 2011-12 2011-12 Article http://purl.org/eprint/type/JournalArticle 01654101 http://hdl.handle.net/1721.1/99239 Beatty, Anne, Scott Liao, and Joseph Weber. “Evidence on the Determinants and Economic Consequences of Delegated Monitoring.” Journal of Accounting and Economics 53, no. 3 (June 2012): 555–576. https://orcid.org/0000-0002-2221-5198 en_US http://dx.doi.org/10.1016/j.jacceco.2011.12.002 Journal of Accounting and Economics Creative Commons Attribution-Noncommercial-NoDerivatives http://creativecommons.org/licenses/by-nc-nd/4.0/ application/pdf Elsevier SSRN |
| spellingShingle | Beatty, Anne Liao, Scott Weber, Joseph P. Evidence on the determinants and economic consequences of delegated monitoring |
| title | Evidence on the determinants and economic consequences of delegated monitoring |
| title_full | Evidence on the determinants and economic consequences of delegated monitoring |
| title_fullStr | Evidence on the determinants and economic consequences of delegated monitoring |
| title_full_unstemmed | Evidence on the determinants and economic consequences of delegated monitoring |
| title_short | Evidence on the determinants and economic consequences of delegated monitoring |
| title_sort | evidence on the determinants and economic consequences of delegated monitoring |
| url | http://hdl.handle.net/1721.1/99239 https://orcid.org/0000-0002-2221-5198 |
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